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LSod 



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SHEARING 






SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 



MONDAY, MARCH 21, 1994 
3:02 P.M. 



DOCMM* MT * OEPT. 

APR 2 6 1994 



MGSi^O 



iutfUC L1B«ABY 



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8 HEARING 

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12 STATE CAPITOL 

13 ROOM 113 

14 SACRAMENTO, CALIFORNIA 
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MONDAY, MARCH 21, 1994 
3:02 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



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1 APPEARANCES 

2 MEMBERS PRESENT 

3 SENATOR WILLIAM LOCKYER, Chair 

4 SENATOR WILLIAM CRAVEN, Vice Chair 

5 SENATOR RUBEN AYALA 

6 SENATOR ROBERT BEVERLY 

7 SENATOR NICHOLAS PETRIS 

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9 STAFF PRESENT 

CLIFF BERG, Executive Officer 
PAT WEBB, Committee Secretary 
RICK ROLLENS, Consultant on Bill Referrals 
NANCY MICHEL, Consultant on Governor's Appointments 



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14 ALSO PRESENT 



15 JOSEPH M. DOLPHIN, Member 
Board of Governors 
California Community Colleges 



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17 VISHWAS D. MORE, Member 
Board of Governors 
California Community Colleges 

SENATOR DON ROGERS 



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JAY R. VARGAS, Director 
Veterans Affairs 



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INDEX 

Page 
Proceedings 1 

Governor ' s Appointees ; 

JOSEPH M. DOLPHIN, Member 

Board of Governors 

California Community Colleges . . • 1 

Background and Experience 1 

Questions by CHAIRMAN LOCKYER re: 

Thoughts on Student Fees and Future 2 

Alternatives to Fee Increases 2 

Specific Types of Efficiencies 3 

Role in Local Issues 3 

Implementation of Reforms Established 

by AB 1725 in 1988 4 

Help on Homeless Project 5 

Association with Milton Friedman 5 

Statement of Support by SENATOR CRAVEN 6 

Questions by SENATOR AYALA re: 

Suggested Response to Letters on Student 

Fees and Adminisrative Salaries 6 

Questions by CHAIRMAN LOCKYER re: 

Involvement as Board Member in Public 

Debate over Fee Proposals 9 

Debate over Cal Grants 10 

How New Federal Monies May Help 10 

Motion to Confirm 11 

Committee Action 21 



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INDEX (Continued^ 

VISHWAS MORE, Member 

Board of Governors 

California Community Colleges 12 

Questions by CHAIRMAN LOCKYER re: 

Amount of Time Needed for Service on Board .... 12 

Hardest Decision on Board Thus Far 12 

Balancing Future Budgets 13 

Past Work with Bureaucracies 14 

Questions by SENATOR PETRIS re: 

Drop in Student Enrollment 15 

History of Community Colleges in California ... 16 

Need for Taxpayers to Support Higher 

Education 17 

Possibility of Elimination of Fees in Future ... 17 

Questions by SENATOR AYALA re: 

Reason for Decline in Student Enrollment 18 

Defeating Purpose of Community Colleges 19 

Questions by CHAIRMAN LOCKYER re: 

Losing Old Tradition of General Fund Paying 

for Insructional Costs 19 

Any Difficult Votes while on Board 20 

Motion to Confirm 21 

Committee Action 21 

JAY R. VAGAS, Director 

Veterans Affairs 22 

Introductory Support by SENATOR DON ROGERS 22 

Questions by CHAIRMAN LOCKYER re: 

Need for Additional Veterans' Homes 24 

Home in Barstow 2 6 



INDEX (Continued) 

Preferred Sites for Future Veterans' Homes .... 2 6 

Improvements in Efficiency and Readiness 

of Department 2 8 

Questions by SENATOR PETRIS re: 

Congratulations on Turning Around Situation 

on the Oakland Fire 29 

Homeless Veterans 30 

Possibility of Housing Homeless Vets 

at Recently Closed Bases 31 

Commitment to Support Efforts to 

Provide Homes for Homeless Vets 33 

Funding of Veterans Home in Yountville 34 

Questions by SENATOR AYALA re: 

Position on Changing Composition of Veterans 

Advisory Council 35 

Possibility of Cabinet Status 36 

Single Versus Double Residency at 

Veterans Homes 38 

Proposed Golf Course at Yountville 39 

Benefits to State 40 

Benefits to Members 41 

Members Kept Informed 41 

Acknowledgement by CHAIRMAN LOCKYER of 

Numerous Supporters in Audience 4 3 

Questions by CHAIRMAN LOCKYER re: 

Improving Matters for Women Veterans 4 3 

Motion to Confirm 44 

Committee Action 44 

Termination of Proceedings 45 

Certificate of Reporter 4 6 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN LOCKYER: I guess Mr. Dolphin should be the 
first that we hear from. 

Good afternoon. 

MR. DOLPHIN: Good afternoon, Senator. 

CHAIRMAN LOCKYER: Would you like to start, maybe, by 
just giving us a brief description of how you've been doing, 
whether you like this work, and why you're suited for it? 

MR. DOLPHIN: Yes. It's very rewarding. 

I've spend my entire lifetime running a business 
called — my adult lifetime — called Medevac, which is an 
ambulance and paramedic service. During the course of that 
business experience, I was fortunate to have my personnel 
trained by the community college system, EMTs and paramedics, 
and that was throughout California, five different counties, 
including San Mateo, Los Angeles, San Bernardino, San Diego, and 
community college system, and I believe now that I'm part of the 
Board of Governors, that I can contribute from the other side, 
especially in the vocational education area. 

It's been a very rewarding experience, and I think my 
business sense has contributed to the management of the system. 

CHAIRMAN LOCKYER: Do you, perhaps, want to share 
with us some thoughts about student fees, administrative perks, 
and things of that nature that seem to be the — 

MR. DOLPHIN: Topics of the day? 

CHAIRMAN LOCKYER: Yes, seem to be the topics that 
routinely come up during these recent weeks . Any thoughts about 



1 where we're headed, what's happened, and where you wish to go in 

2 the future? 

3 MR. DOLPHIN: Well, hopefully we won't have to look 

4 to the students in the future in such a degree. Student fees 

5 have gone from $6 to $10 to $13, and, you know, we're going to 

6 have to ask people to pay for their education to some degree. 
| California community colleges are still a real 

bargain. Unfortunately, putting the onus on the student when it 



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: is such a small portion of the overall budget is not the 



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preferable way to finance. I hope that we can minimize student 



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As far as administrative perks go, we really — we 
have nothing to do with the compensation of the people in the 
Chancellor's office. That's handled through the Legislature. 
15 CHAIRMAN LOCKYER: What are the alternatives to fee 

increases? 

MR. DOLPHIN: Better management. I think there's a 
lot of room for improvement there . 

The Commission on Innovation report will, hopefully, 
give us a real leg up in terms of taking some of these 
proposals, like distance education, and saving a considerable 
amount of money in administrative overhead. I think that's the 
wave of the future. 

I think we can no longer continue to just throw money 
at these problems. We have to find better ways to deliver the 
product . 

CHAIRMAN LOCKYER: I'm noting that that report from 
the Commission on Innovation has indicated that perhaps 



1 one-third of the new resources needed might come from 

efficiencies. Are there any specific types of efficiencies that 

3 you would contemplate? 

4 MR. DOLPHIN: Well, it seems that probably the 

5 biggest thing would be to minimize the overhead, the tremendous 

6 amount of overhead. 

i I'm the Foreman of the Grand Jury in San Diego 

County. We just issued a report on the community colleges in 
; San Diego County. The five different districts there could 
alleviate a tremendous amount of expense if they were to join 
together in some of these grant proposals and other things, and 
not compete for students on that level . We think there ' s a 
tremendous amount of administrative overhead that can be cut 
out. 

So, I would look first in that area in terms of 
budgetary savings. I think that's where the most — I think the 
future in terms of capital outlay is going to be lowered because 
of some of thee other proposals, like distance education, and 
that can be used in the services as well. 

CHAIRMAN LOCKYER: Anything that would affect class 
sizes, or staff workload, or anything in the domain, or are they 
mostly the purchasing and — 

MR. DOLPHIN: Many of those issues that you just 
mentioned are local issues, and the Board of Governors just 
basically does not get involved in local decision making. 

CHAIRMAN LOCKYER: So you don't feel like you have a 
role in that respect? 

MR. DOLPHIN: Not other than basic general 



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guidelines, Senator. I don't think that we should be running 



each individual district. 



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CHAIRMAN LOCKYER: I note that six years ago, 
legislation was passed — it happened to be Assembly Bill 1725 
— which established this long-term framework for community 
college reforms in a whole variety of areas. 

Is there any discussion among your colleagues about 
how to implement those reforms? Is it gone, or is it still 



9 alive? 

MR. DOLPHIN: We have a meeting — in each of our 
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meetings devoted to legislation, we have a legislative report, 
and we're constantly — 

CHAIRMAN LOCKYER: This was passed six years ago. 

MR. DOLPHIN: I wasn't here six year ago. 

CHAIRMAN LOCKYER: It's before your time, but what 
I'm wondering is if that law is in any way before you, 
discussed, and — 

MR. DOLPHIN: Are you talking about the consultation 
process? 

CHAIRMAN LOCKYER: AB 1725 talks about governance, 
and finance — 

MR. DOLPHIN: Yes, we're briefed on that — on the 
law, and our role as it relates to the districts, and shared 
governance, and those issues, and we talk about that a lot. 

But as far as I know, there has been no proposal to 
update that law. 

CHAIRMAN LOCKYER: So that discussion, though, is 
alive? 



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1 MR. DOLPHIN: It's ongoing, yes. We live under those 

2 regulations, Senator. 

3 CHAIRMAN LOCKYER: Tell me about the "60 Minutes." 

4 We ' re going back almost ten years . 

5 | What were you doing to help solve the homeless 

6 problem? 

7 MR. DOLPHIN: I was involved with that. I was 

8 Chairman of the Salvation Army in San Diego County, and Judge 

9 Coates, who's a local advocate for the homeless, organized a 
group of twelve individuals from the Mayor's Task Force on the 

11 Homeless to become homeless for 24 hours. 

We went down to San Diego. We went downtown, with no 
money, and tried to see what kind of experience it was to 
actually live on the streets as a homeless person. 

A few years later, "60 Minutes" decided to do a story 
about that experience, and about Father Joe Carroll, who's one 
of our leading homeless advocates in San Diego. And so, I was a 
part of that show, the program. 

CHAIRMAN LOCKYER: What have you done to catch Milton 
Friedman's eye? 

MR. DOLPHIN: I've — I was a part of the — of his 
book, Free to Choose . I believe it was, and his T.V. series on 
PBS because I ran — when I was running the San Mateo County 
paramedic program, I instituted some private sector initiatives 
where paramedics did some of the tasks that physicians 
previously had done. It's kind of changed the profession. 

CHAIRMAN LOCKYER: Senators Ayala or Craven, any 
questions? 



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SENATOR CRAVEN: I have no questions, Mr. President, 
but I've had the good fortune of knowing Joe Dolphin for some 
years . Back in the days when I was with the County of San 
Diego, he was very active even in those days. 

I recall his activity with the Y in San Diego, and 
also small business. It seems to me at that time, he was -- 
perhaps it ' s not right to say he was the spokesman for that area 
of commercial aspect of our life — but he was very active in 
the small business group. And I suppose, in no small measure, 
too, the fact that he himself began as a small businessman with 
the service, ambulance service, which he had, and he changed 
that. He no longer is a small businessman; he has made a big 
business of it. 

It was due, I think, to his own doggedness, and his 
work ethic, and the fact that he took time, no matter how busy 
he was, to go out and help someone else. 

I've always respected that about Joe, or anyone. But 
since I know him, I feel very, very happy to have him here 
today, and when the time is appropriate, move his confirmation. 

CHAIRMAN LOCKYER: Senator Ayala. 

SENATOR AYALA: Mr. Dolphin, I guess you have a lot 
of issues to face in that responsibility that you have today. 

But I get more letters, and I'd like to have you tell 
me how to respond to them, that the Board of Governors have 
raised the tuition fees for the students, and passed it on to 
the administrators in salaries, increased salaries. 

The perception is that you're penalizing the students 
in order that the administrators get the enhancement on their 



salaries . 

2 Can you tell the rationale behind what the Board did 

3 or is doing every year? 

4 MR. DOLPHIN: Certainly I can, Senator. 

5 First of all, those letters should, I think, mostly 

6 be directed at the University system and not at the community 
colleges . 

We have not raised salaries of the Chancellor's 
office. In fact, I think there's even a freeze on the 
Chancellor's office. 

As far as the fees, the student fees go, we're kind 
of the victim. And I don't want to lay the onus on you, but the 
Governor and the Legislature set those fees. We just recommend 
what we think is appropriate and then go along with whatever the 
Legislature and the Governor decides is the appropriate amount. 

The student fee issue is one that's close to my heart 
because my daughter goes to Bakers field. She is not being 
subsidized by her father any longer now that she's an adult, and 
these fees do cost a lot of money for her and her family. I'm 
very sensitive to that. 

So, I would hope that we could hold the student fees 
within reason. I think they've gone up quite a bit, and 
hopefully, we won't have to make a big move on those in the 
future . 

But I think we ought to take a look at the University 
system when we talk about fee increases and salaries for 
administrators before we look at the community college system, 
Senator. 



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SENATOR AYALA: I think you're right. Most of the 
; letters were from the four-year colleges, although I have three 
or four community colleges in my district. They also joined the 
crowd, I guess, to be there. But mostly, they're directed at 

5 the Regents, and upset with them. 

6 The only thing I could do was to tell them that I had 
no jurisdiction over that except when we vote on members, and I 
will remember to help them as much as I could. This way, I 
don't intend to vote for any appointee to the Regents that has 
voted to raise the students' tuition and, at the same time, 
passed that on to the administration. I think it should have 
been tuition fees raised, and hold the line to show that we are 
having a problem. 

But it appears as if you penalize the students, 
making it harder for students from the lower income families to 
attend, so they could pass that on to the administration, which 
didn't look goo at all. 

You're right. They're mostly from the four-year 
colleges we got the opposition. 

MR. DOLPHIN: We're very concerned about low-income 
in the community college system, because a lot of the people 
that we get in our system are the ones that can't afford to go 
to the other systems . 

What we are — whatever student increases in fees 
there be, we hope that there will be aid packages that will 
minimize that impact on the low-income student. That's what our 
goal is . 

SENATOR AYALA: Tuition increases are a must these 



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1 days. Education costs more. 

2 MR. DOLPHIN: That's right. 

SENATOR AYALA: And these students must bear their 
burden of the costs of education provided they get jobs or 

5 loans . 

6 But to turn around and then enhance the salaries of 
J administrators, that didn't look too good to the people out 

there, and I'm very concerned about that. 



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9 MR. DOLPHIN: Well, our Chancellor hasn't had a raise 

in a long time. He understands that we just don't have the 
resources, and we can't be raising student fees. And he's here 
today. He could understand what we're talking about. 
13 I think all the members of the Board of Governors 

share your concern, Senator. 
15 SENATOR AYALA: Thank you. 

CHAIRMAN LOCKYER: Do you consider it part of your 
job description to be active in expressing opinions to the 
Governor, to the Legislature, and the general public about the 
wisdom, or lack of wisdom, of any particular fee proposal? 

I ' m not trying to suggest you ought to have a 
particular view, but is it part of your role to be involved in 
that public debate? 

MR. DOLPHIN: Senator, it most certainly is. 

I'm a free thinker, and when I served Governor Brown 
as Chairman of his Small Business Committee, and President 
Carter as Vice Chairman of the Resolution Committee of the White 
House Conference of Small Business, and Governor Reagan, I told 
them my feelings whether they like it or not, and I will tell 



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you the same thing, Senator. 

2 CHAIRMAN LOCKYER: That's a good quality. We 

3 encourage it. 

4 MR. DOLPHIN: Thank you. 

5 CHAIRMAN LOCKYER: Let me ask, there's been this 

6 debate about Cal grant A and B, and whether there needs to be 
more money for scholarships in the need or merit universe . 

Do you have any particular view about that that would 
help us to — 

MR. DOLPHIN: I really don't know enough about it to 
give you an educated comment. 

CHAIRMAN LOCKYER: That's fair. 

Getting more to your work history, we're now 
anticipating a lot of new federal law, and program and money, 
relating to job training. 

There seems to be an occasional criticism offered up 
of the community colleges that they tend to not provide nursing, 
and other such vocational training, because of the cost. But 
yet, there's a great need for those jobs, or a demand for those 
jobs . 

Do you have any sense of whether the system, I know 
you have a lot of, again, individual campuses that are making 
the curriculum decisions, not yourself, but any sense of how 
you'd like to put the new federal act to work, and what it might 
mean to the college system? 

MR. DOLPHIN: Yes, I do. 

First of all, my daughter is a nursing student at 
Bakersfield. My second daughter is a registered nurse, so I 



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have a little background in nursing. 

I think that when you have a specialized course, that 
it ought to be available on a regional basis instead of each 
campus competing for minimum students. If there's enough 



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students to put it on at various campuses, that's all right. 



But if there's — if there has to be a shared course between 
contiguous districts in order to make a class, I think that's 
perfectly appropriate as long as the travel distance is not too 
outrageous for the student. 

I think that we should offer those kind of courses 
throughout the state so that there will be trained professional 
nurses, and other kinds of people, access to that program 
throughout the state . 

CHAIRMAN LOCKYER: Dental assistant, some of those. 

MR. DOLPHIN: Yes. I think it's very appropriate to 
do that. 

CHAIRMAN LOCKYER: Let me inquire if there's anyone 
present who would wish to testify with respect to this 
nomination? 

Senator Craven. 

SENATOR CRAVEN: Mr. Chairman, I'd like to move the 
nomination to the Floor, please. 

CHAIRMAN LOCKYER: Call the roll, please. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 
Senator Petris . 

SENATOR PETRIS: Aye. 



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SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

MR. DOLPHIN: Thank you. 



6 CHAIRMAN LOCKYER: Good luck. 



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SENATOR CRAVEN: Mr. Chairman, could we hold the roll 
open? I think Senator Beverly would like to vote on this issue. 

CHAIRMAN LOCKYER: Certainly. 

Our next one again for the community college system 
is Vishwas More. 

Good afternoon. 

MR. MORE: Good afternoon, Senator. 

CHAIRMAN LOCKYER: You've been serving for a while on 
the Board. 

MR. MORE: Right. 

CHAIRMAN LOCKYER: How do you like it? 

MR. MORE: Excellent. I enjoy it very much. 

CHAIRMAN LOCKYER: Do you? How much time does it 
take? 

MR. MORE: For me, since I have retired now, I am 
making that as my full-time job. 

CHAIRMAN LOCKYER: So it's every day. 

MR. MORE: Every day. 

CHAIRMAN LOCKYER: Lots of hours? 

MR. MORE: All the time. Whatever is needed. 

CHAIRMAN LOCKYER: What's been the hardest decision 
you've had to make so far? 



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MR. MORE: Well, hardest decision, since we are the 
State of California, the crisis on the budget and the money 
system, and more worry is how we going to make the system work 
efficiently, properly, and the ethnic community growing in the 
State of California, the number of students growing in 
California, so the worry is how are we going to handle this 
future, kids coming to our schools. That's the major worry that 
I have right now. 

CHAIRMAN LOCKYER: Do you have any sense of how 
you're going to balance future budgets, or recommend -- 

MR. MORE: Well, my background is engineering. And I 
think I am — if I am not wrong, I am — I might be the first 
engineer on the Board. 



14 CHAIRMAN LOCKYER: Pardon? 

MR. MORE: I might be the first engineer on the 
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Board. 

So, I have taken a a tremendous interest in finance 
and budget, and looking into the system, how the system is 
working, understanding the system, and trying to find out how 
efficiently we can work. That's one of the things I am doing 
right now. 

I got together with the State Architect and tried to 
get together with them, and reduce the process of approval that 
we have, that we go through on a capital project. So, we have 
come out with a tremendous process which is starting next month, 
and I think we can do very surprise reduction in time in 
approval process without — with abiding all the rules and 
regulations . 



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1 I think this is a good thing, that interacting with 

the other agencies, we've been able to do that with our 
Chancellor's Staff and myself; been very successful to do that 

4 I'm looking into more items of that type, that type: 

5 how can we improve; how can we cut down the bureaucratic time 

6 that it takes and reduce the process of approval . And that ' s 
what we are trying to do that. 

It's working beautifully, and there is a lot of help 
9 from the other departments, and that's happening. 

CHAIRMAN LOCKYER: You worked in some big 
bureaucracies in the past. 

MR. MORE: That's right, correct. 

CHAIRMAN LOCKYER: Is it different? 

MR. MORE: No, not different. 

15 CHAIRMAN LOCKYER: Same kind of culture? 

MR. MORE: Same kind, everything, anyplace, including 
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where I came from, India, same situation. People are same all 
over. 

We got to make it work and reduce the best way we 
can, and make it easier for the students. Bottom line is 
students . That ' s my commitment . 



22 CHAIRMAN LOCKYER: Questions from Members? Senator 

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SENATOR PETRIS: I'm pleased to hear your description 
of the bottom line. 

But I'm sad to report that from 1991-2 year to 
1993-4, two years' budget, we lost 64,749 bottom lines. That's 
how many students dropped out because, we think, because of 



15 

increase in fees. This is at a time when we were trying, 
through the Vasconcellos legislation and programs, to more or 
less guarantee community college students, if they made the 
4 grade, they would have a place either at Cal . State or UC . But 
\ there ' s an awful lot of them that aren ■ t going to have such a 

6 place. Does that trouble you? 

7 MR. MORE: It does trouble me a lot. 

8 SENATOR PETRIS: During your watch and mine over 
here, we're losing this many students. The number we're given 
says that ' s equivalent to three entire UC campuses . That ' s 
debilitating to the whole system. 

MR . MORE : Yes , I agree with you . 

SENATOR PETRIS: Can you comment on that? 

MR. MORE: Yes. Senator, that bothers me a lot. 

I came to this country back as a young student with 
$60, and I went to University of Michigan, Chicago, Stanford and 
UC Berkeley. I struggled. I worked hard, and it bothered me, 
and it ' s my commitment . 

The country helped me, everybody helped me, and it's 
my commitment now to put something back into the educational 
system. 

So, I'm trying to find out what best way some of the 
change that we need to make sure we are not wasting. And that's 
what I am trying to look into in all the capital outlay, for 
anything, that we want to make sure whatever money we get got to 
go to the bottom, to the school and the students. 

So, I have to find out, and we all together, we find 
out on the Board, the best way we can get maximum number of 



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students and educate them, and that's my goal. 
2 SENATOR PETRIS: Well, you know, from the history of 

the institution, you must have read because you weren't here in 
those days, that it started out with no tuition at all at the 

5 junior college level. 

6 MR. MORE: That's true. 

7 SENATOR PETRIS: And that was really our pride and 
joy for many years. That was a secret that other states had not 
discovered. In fact, there probably aren't any other states in 
the Union today that have a system like that, with no tuition. 

Now we're charging tuition. Instead of them 
imitating us, we're imitating them. 

MR. MORE: That's right. 

SENATOR PETRIS: The underlying premise was that the 
responsibility for funding our higher education system, as well 
as K-12, was really up to the public. And during all those 
years they enthusiastically supported it. I don't remember we 
ever having a lot of complaints saying, "I'm sick and tired of 
paying so those other kids can go to University, or Cal . State, 
or the community college." 

Now we don't seem to have that kind of enthusiasm. I 
know you can save money by being more efficient, but I'm very 
skeptical about how much in the total scheme of things . 

It seems to me we ought to go back to the spirit of 
saying, "Hey, it's up to all of us," whether we have children in 
school or not, and whether we went to school or not, it's up to 
all of us for the benefit of the nation to minimize the heavy 
finance burden on the students so they can concentrate on their 



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1 studies. 

2 Do you agree with that? 

3 MR. MORE: I agree very strongly; accept that very 
much, very strongly. 

5 I think I feel the whole economy has a lot to do with 

6 it also, especially State of California. I think if their 
economy is good, there is more money coming, we don't complain 

8 about small items . 

But right now, when everything is tight, and I think 
once we get the economy going, everything will be healthy, 
stronger. And automatically, I think, will be much more 
comfortable, but we've got to get going in all directions. 

And students are much more important. We've got to 
educate them. 

SENATOR PETRIS: When the economy comes back to 
normal, do you think there'll be a movement to eliminate the 
fees, or at least reduce them as much as possible? 

MR. MORE: We should take that definite priority in 
education, absolutely. I believe education should be the first 
criteria, first important thing. 

SENATOR PETRIS: How long is your term on the Board? 

MR. MORE: If you confirm me, it will be another six 
years . 

SENATOR PETRIS: Hopefully, that'll be past the end 
of the recession. 

MR. MORE: I hope it's next year. I'd like to see it 
happen sooner. 

SENATOR PETRIS: I'd like to see you take the lead in 



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1 reducing the burden on students. 

2 MR. MORE: Definitely. That's my goal, and that's 

3 what my commitment is . 

4 SENATOR PETRIS: Thank you. 

5 MR. MORE: Thank you. 

6 SENATOR AYALA: Mr. More, last year the fees were 

7 increased from $10 per unit to $13. 

8 MR. MORE: Right. 

9 SENATOR AYALA: This year, the Governor's budget is 
calling that it go to $20 — 

MR. MORE: Right. 

SENATOR AYALA: — per unit. 

Now, in this same period of time, we experienced the 
nation's largest decline in enrollment in our community 
colleges . 

Can you tell us why you think that occurred, the 
tremendous decline in enrollment? 
18 MR. MORE: Well, I feel any amount of money, the fee 

that we are increasing, there are a lot of students in the State 

20 of California can't afford even certain small amount of 

21 



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increases . 

And I think definitely we have to worry about the 
ethnic community, our poor students, our poor parents, those who 
cannot afford it. I think definitely it does hurt them, any 
amount of money. So, that is an effect on that. 

SENATOR AYALA: Do you feel that the decline will 
continue if we raise it from $13 to $20 per unit? 

MR. MORE: I presume it will. 



19 

1 SENATOR AYALA: You think it will. 

MR. MORE: I think it will. 

SENATOR AYALA: We're defeating the purpose; aren't 
we? 

MR. MORE: Well, that's what's happening. And I 
think we all of us have to work hard together, some way or the 
other, to stop that roll, and I think we all together, working 
together, that we can stop that. 

We have to do it. We have no alternative. This is 
one of the best states, and we've got to maintain that state and 
students . 

SENATOR AYALA: Whenever we raise the fees and 
tuition, we're admitting that some people can't attend those 
higher elevated colleges, and higher education, because they 
can't afford it, and that defeats the purpose of having these 
institutions . 

MR. MORE: Agreed. What we have said before — 

SENATOR AYALA: Not that they're only there for the 
poor, but they're not able to participate. 

MR. MORE: No, we have to find out some better 
solution, working all together. 

SENATOR AYALA: Thank you. 

MR. MORE: Thank you. 

CHAIRMAN LOCKYER: Sir, I guess the history has been 
that instructional costs were borne by the General Fund, and 
fees paid for kind of auxiliary services. Now that's a practice 
or tradition that we're losing. 

It sounds like, from your comments, that was a 



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philosophy that you approved of before the fee build up for 

2 instructional needs . 

3 I don't want to misstate your position at all, but is 
that — 



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5 MR. MORE: No, I don't think that's correct, no. 



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CHAIRMAN LOCKYER: Is there anyone present who would 



wish to comment? 



MR. MORE: My daughter is here, if you want to talk 
to her. 

CHAIRMAN LOCKYER: Is she going to say nice things 
about you? 

MR. MORE: I hope so. She said, "I know you better." 

By the way, all of my children, four of them, are 
products of community colleges, my wife also, so we are a 
product of community colleges . 

CHAIRMAN LOCKYER: Are there other questions from 



17 Committee Members? 

Let me ask one more time, was there a vote that you 
19 



had to cast that you struggled with, that was a hard vote to 
cast during your tenure on the Board? Is there one that you can 
recall, reflecting back, that was difficult for you? 

MR. MORE: You mean in the last 6-8 months since I've 
been — no, I think we've been — the Board is very active and 
together. On the issues we operate together, so there has been 
no — nothing that has struggled me. 

CHAIRMAN LOCKYER: Was there any controversy before 
the Board that caused a split vote at all in the last — 

MR. MORE: Not to my remembrance. We've been fairly 



21 

1 consistent, all of us. 

2 CHAIRMAN LOCKYER: Okay. 

3 SENATOR CRAVEN: Move. 

4 CHAIRMAN LOCKYER: Senator Craven moves 

5 recommendation. 

6 Call the roll. 

7 SECRETARY WEBB: Senator Ayala. 

8 SENATOR AYALA: Aye. 

9 SECRETARY WEBB: Ayala Aye. Senator Beverly. 

10 SENATOR BEVERLY: Aye. 

11 SECRETARY WEBB: Beverly Aye. Senator Petris . 

12 SENATOR PETRIS: Aye. 

13 SECRETARY WEBB: Petris Aye. Senator Craven. 

14 SENATOR CRAVEN: Aye. 

15 SECRETARY WEBB: Craven Aye. Senator Lockyer. 

16 CHAIRMAN LOCKYER: Aye. 

17 SECRETARY WEBB: Five to zero. 

18 MR. MORE: Thank you. 

19 CHAIRMAN LOCKYER: We have kept the other item on 

20 call so that Senator Beverly might record a vote. Lift the roll 

21 call. 

22 SENATOR BEVERLY: Thank you. I was in the 

23 Appropriations Committee. 

24 SECRETARY WEBB: Senator Beverly. 

25 SENATOR BEVERLY: Aye. 

26 SECRETARY WEBB: Beverly Aye. Five to zero. 

27 [Thereupon the Senate Rules 

28 Committee acted upon legislative 



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agenda items . ] 

CHAIRMAN LOCKYER: Colonel Vargas, I think, is our 
3 next, and Senator General Rogers. 

SENATOR ROGERS: Thank you for the promotion. 
5 Of course, I'd have to find out which branch of 

service you're talking about. If it's anything other than — 

CHAIRMAN LOCKYER: Here you want to be a Marine. 

SENATOR ROGERS: I'll accept that. 

CHAIRMAN LOCKYER: It's at least two-fifths of the 
Committee, and so that's a good start. 

SENATOR ROGERS: I'm glad you made that point for me, 
Mr. Chairman. 

I'm here on behalf of Colonel Vargas. As you know, 
he's up for confirmation as the Director of the California 
Veterans Department, or Department of Veterans Affairs. 

I'm not going to give a long testimony, but I just 
want to remind the Members of a couple of things . 

First of all, Colonel Vargas hit the ground running 
whenever he came in as Director. He immediately settled all of 
the claims and the problems regarding the Oakland fire in 
Senator Petris ' s district. All of those veterans' claims have 
been settled. He did that very quickly. 

Another thing he did, you know, we keep hearing, 
well, certain groups speak. They say, "We speak for all the 
veterans in California." 

Well, we found out that's not true. They may think 
they do, but they don't. We've got a lot of different Veterans 
Affairs, and they really can only speak sometimes for a very few 



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1 members. So, he's been kind of clearing the air on that. He's 
going around, meeting with all of the different veterans' 

3 organizations and saying, "Now, don't claim something that you 

4 can't really deliver. If you do have agreement or something, 

5 that's fine, but don't claim you speak for all the veterans if 

6 you don't really do that." 

7 That's been a help, I know, to me. In fact, just as 
a show of support, we have in the audience here today in the 
back all of the State Commanders of all the veterans ' 
organizations in the State of California who are here to express 
their support for the confirmation of Colonel Vargas. 

Just a couple other things and I'll be through. 

13 He's also directed that all divisions within his 

department to improve their responsiveness to the needs of women 
veterans, which sometimes we tend to neglect. However, we do 
have a large contingent of women veterans in the state. 

He's been very helpful in establishing the second 

18 Veterans Home in Southern California. In fact, we have the 

first one of several, which will be in Barstow, and we're going 
to lay the cornerstone for that new Veterans Home. We'll take 
care of some 400 clients, and that will be on May the 21st of 
this year, which just happens to be Armed Forces Day. I 
understand that there's going to be a lot of us there. Colonel 
Vargas will be there, and we're looking forward to a big day. 
But that's going to be the beginning of a second Veterans Home, 
this one in Southern California, in addition to the one in 



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There are a lot of other things here. I won't take 



24 

1 up your time, but one other thing, at the request of Assemblyman 
Tom Connolly, who is the Chairman of the Subcommittee for 
Veterans on the Assembly side, he could not be here today. He 

4 asked me to read — and I'm not going to read all of it. 

5 CHAIRMAN LOCKYER: We have a copy. 

6 SENATOR ROGERS: You have a copy of it, okay. That's 
fine. But he is expressing his support for Colonel Vargas. 

So with that, I'm happy to be here to offer also my 
support, and I didn't — Jay was a little hesitant. He said, 
"You know, Don, should I come up there with you or stay in 
back?" I said, "No, come on up. I'll try not to embarrass you 
too much. " 

He's a very modest man, but he has an outstanding 
record. He's done a good job since he became the Director, and 
I for one, as Chairman of the Veterans Committee in the Senate, 
would like to see him confirmed and allow him to continue doing 
the good job that he's been doing. 

So with that, Jay, I know they've got some questions 
for you, so I wish you well. 

CHAIRMAN LOCKYER: Thank you, Senator Rogers. You've 
done a good job. 

COL. VARGAS: Thank you, sir. 

CHAIRMAN LOCKYER: Maybe, since Senator Rogers had 
commented on the new Veterans Home, you could comment for us on 
the recommendations of the Legislative Analyst and others who've 
indicated that there may not be as great a need for those 
facilities as we once thought. That is, empty beds at 
Yountville, and so on. 



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1 I understand there's a geographic issue, but what 

about the fiscal one? Can you provide some information or 

3 specifics on that? 

COL. VARGAS: Let me start — I hope I don't lose too 
many friends on this response with the Legislative Analyst, but 

6 there is a tremendous need for veterans homes in Southern 

7 California. 

8 The recent census that was taken, by the year 2000, 
there's going to be 1.2 million veterans over the age of 60. 
Approximately 700,000 of those will be in Southern California, 
the remaining will be in Northern California. So, there's 
always going to be a demand for veterans to seek membership into 

13 Yountville and the future homes in Southern California. 

As you know, in Yountville, once the construction is 
completed, will have a capacity for 1600, and our hope is to 
complete the four homes in Southern California, which will house 
another 1600 veterans. 

I have received some information where people are 
concerned about waiting lists into Yountville and into the 
future homes in Southern California. Well, right now in 
Yountville, we have a waiting list of 400. 

But what has constrained Captain Reber, Mike Reber, 
the Administrator out there, is that we're only budgeted with 
General Funding for 1125. So, rather than cause any anxiety in 
some of our veterans throughout the State of California and 
saying, you know, "Prepare. Pack your sea bag, sell your home; 
drive up here," it's just not worth it at this time. 

And if we were to, in Yountville 's case, to 



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1 completely go beyond the 1125, I would have to come forth to the 
legislation [sic] and request for millions of dollars to push 
that program into full speed. 

Shifting to Barstow, the first home that's going to 

5 go into that area, I have never — I've been out there twice now 
since I've been here in the eight months, three times — I've 
never seen a community so anxious to get the Veterans Home into 
their city. It's going to be — it will house 400. It will 



4 



have 220 beds that will house the domiciliary type veterans, and 

they're still fairly mobile and can still go around on the town, 
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and travel throughout the state. And there will be the 
intermediate — 120 intermediate caring facilities for veterans. 
The additional will be skilled nursing types. 

The Home is beautiful. The design has been put 
together by a San Diego firm, Larry Sillman, Incorporation, and 
it ' s a beautiful Home of which any room that ' s going to be built 
into that facility can go from domiciliary into skilled nursing. 
So, it's going to be — it definitely will — I'm not worried 
about filling Barstow. 

I do — I'm only one member of the Commission and the 
future task force that hopes to push on with the other three 
homes . And I would — and it ' s Jay Vargas talking — I would 
like to see two coastal site homes, and two inland type homes 
put in Southern California. Why? Because I think it would give 
flexibility to a veteran who's been out at the desert and would 
like to come into San Diego, for an example, or vice-versa. 
Somebody might like to go out to the desert. And it gives us 
tremendous flexibility. 



27 

And we can move these veterans around. We're going 
to have our vehicles to put these — move these people around if 

3 they so desire. 

4 The reason that I would like to see specifically a 

5 home go into San Diego, California, I'll say the University of 

6 Irvine, for an example, they would like us to come in and take a 
; look — I have another flight here shortly — to get to chat 

with those people. They're open arms and would like to have one 
of our homes on their campus because they're going to build a 
School of Medicine there, for example, and they'd like to have 
the Veterans Home there nearby where they could study aging, 
like we're doing presently at Yountville. 

But I personally believe that two homes along the 
coastal areas, specifically San Diego and UC Irvine, or 
somewhere in the L.A. area, would be a tremendous asset to the 
communities. I think people could come and see Uncle Joe, or 
Uncle Jay, for an example, if I happened to be in the home in 
San Diego because there's a lot of things to do in San Diego. 

A lot of folks feel that there's — why the high — 
not the high desert, but out in the desert area? It's healthy; 
it's clean air. Both communities that we have looked at, like 
Barstow, of course — I hate to use the word "bonkers", but they 
have gone bonkers over this project. They want this home so 
bad, and you can't go anywhere in that city without people 
hearing, or you'll hear people talk about the homes. 

Lancaster is another site that we've looked at, and 
it has the same atmosphere as Barstow. The community is just 
tremendously behind this project, hoping that they will get it. 



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And I'll say "hoping that they will get it", because only one 
site has been picked and agreed upon, and it's funded. 

We have received funding from the U.S. DVA, and 
Public Works has come through with the funding, the state 
funding, for the Barstow program. It's the only one that has 
been totally funded a this time. 

I'm not concerned about filling it, sir. I'll fill 
them all. 

CHAIRMAN LOCKYER: Colonel, you have quite a 
distinguished record that I want to just acknowledge. 

COL. VARGAS: I'm a lucky person to be here, sir. I 
really am. 

CHAIRMAN LOCKYER: I note in looking at your 
experience, that you talk about during the time that you were 
headquartered in Japan, that you significantly improved the 
readiness, effectiveness and efficiency of your unit. 

What would you do with respect to your current 
responsibilities that might improve the efficiency and readiness 
of the Department? Do you have any thoughts about that for us? 

COL. VARGAS: I do. Already I have set — I 
personally believe that I've set the Department on course for 
the 21st Century. I've come up with eleven objectives in which 
we have — where our team, my people, are working to accomplish 
and to find solutions to. 

I'm not bragging; it's a fact. Other states have 
caught hold of these eleven objectives, and now are 
incorporating them into their departments, veterans departments. 

They're good, solid objectives. We're working very 



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1 hard with task forces to reach a lot of these -- most of the 
objectives. It's going to take some time to accomplish them 
3 all. Like, I've given everyone until next Saturday. 

But the bottom line is putting veterans first. 
That's the motto of our Department, and I came up with that 
since I've come aboard, and believe it or not, it is the 
national motto today. No bragging, a fact. Other states are 
adopting it. 

I think if we can all get on the same frequency in 
putting veterans first, that this country will be in great 
shape, and so will the veterans. 

My past experiences as to pushing the Department, I 
have shaken it up a little bit. Some people have left. Some 
people have been asked to leave . 

But I wanted to make it the best serving agency for 
veterans in the United States of America. 

CHAIRMAN LOCKYER: A worthy objective. 

Other questions? Senator Petris . 

SENATOR PETRIS: Well, first I want to commend the 
Colonel. I met him shortly after he was appointed, while I was 
attending — I want everybody to notice this — a meeting of an 
American Legion Post in San Francisco. So, I want all you other 
veterans to make note of that. 

We had a good talk when we first met, and I've talked 
to him since. 

I wanted to congratulate you on the way you turned 
the thing around on the fire situation in Oakland. Prior to 
your arrival, I was having a running battle, as you know, with 



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the Department. They just didn't seem to want to move. They 
acted like a commercial insurance company, resisted the claims 
of veterans . There were seven or eight veterans who lost their 
homes . They were giving them a awful bad time . 

5 The Colonel came in and turned that around right away 

6 quick. 

And then I've learned that you did the same thing at 

the earthquake, that your Department really moved in quickly and 
found out, you know, when the veterans applied, and processed 
their claims very quickly. I want to commend for that, too. 

COL. VARGAS: Thank you, sir. 

SENATOR PETRIS: I had one question on the homeless 
problem in the Bay Area. That's where I live. I can't say much 
about what's happening in other parts of this state, but very 
frequently, when some local station does a commentary, or runs a 
program, or some interviews, about the plight of the homeless, 
it seems that either there ' s a very high percentage of veterans , 
or they seek out those who are veterans . It gives the 
impression to me, as a viewer at home, that there's an awful lot 
of veterans out there who are in the homeless category. 

Now, probably the answer is somewhere in between 
those two. Is the Department trying to help homeless veterans 
get some housing? 

I know that they don't qualify for our housing 
program, because they don't have any money, but is there 
anything that the Department is doing or can do? 

COL. VARGAS: We're participating in the, of course, 
the stand-downs that are conducted throughout the state. We've 



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1 gone to Ventura, San Diego, San Francisco, right here in 

Sacramento, where we have brought — and we've participated. 
It's really run by the Department; EDD really runs that, but we 

4 took a strong part of that in bringing in veterans to either 
house them, clean them up, work on their dental, medical, et 
cetera. 

7 On the homeless part, it's kind of difficult for my 

Department to resolve or solve that one, but I have an idea. 
And I have spoken to several Senators and Assemblymen, and 
recently back on the 24th and 25th of February, this idea was 
taken back to Senator — excuse me, to Secretary Jesse Brown's 
conference that he was having back there on homeless. Because I 
have learned that one out of three homeless are veterans. 
SENATOR PETRIS: Is it that high? 
COL. VARGAS: That's how high it is. 
The proposal that I made, and I still feel that the 
Department of EDD could take the lead on this because they do 
get some federal money, whereas I don't, but I would like to see 
us, the State of California, take one of our bases that we have 
recently closed, and possibly bring in our homeless veterans 
into that base. Bring in some of the corporations, their 
teaching teams, their mobile teams that could teach people how 
to be a mechanic, how to run a golf course, how to run a tennis 
club, how to run a bowling alley. And bring these people — 
there's homes on some of these bases; there's recreational 
facilities aboard those bases. 

I believe big corporations could come in and assist 
the state in training these people. And once they're trained, 



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we can have them go out and assist them in getting a job. And 
the first couple of pay checks they have, they can refurbish or 
pay back to the site or to the state, if you want. 

It's just an idea that I have for the homeless. 



5 I'm like the Senator. I cried at the stand-down we 



had in Sacramento because coming through the soup line was one 
of the guys I fought with in Vietnam. I couldn't believe that 
he was — he was a first sergeant in Vietnam, and he had lost 
everything . 

It's just an idea, but I think it can work. Rather 
than having transition teams fly all over the state and try to 
teach people how to learn a new employment, I think we could 
take advantage of one of these bases and bring these people in, 
these homeless people, and train them and get them re-educated, 
get them back out into the community and making money. 

SENATOR PETRIS: That sounds great to me. 

I've noticed in the last week alone two significant 
moves in the direction of providing homes for the poor. One is 
a private-public combination funded by — I forget the name of 
the institutions. I think World Savings is one. Sandler, Mr. 
Sandler, who's the President, has committed an enormous amount 
of money from his organization as a donation, and for other 
kinds, too; a very low interest rate and so forth, along with 
some kind of government program. 

And then I noticed at the national level, an enormous 
amount of money has just been committed for housing for the 
whole country for the homeless. 

I would hope that, even though I wouldn't expect your 



33 

1 Department to provide housing, that you could lend your support 

2 and — 

3 COL. VARGAS: Yes, sir, we can. 

4 SENATOR PETRIS: — and nudge the participants in 

5 those programs to maybe carve out a certain portion of it for 

6 veterans . 

7 If the percentage is that high, we ought to be 

8 committing a comparable amount of our resources to do what we 
can to help there. 

COL. VARGAS: I agree with you, sir. 

And I have to compliment the people who are sitting 
behind me, the State Commanders of the VFW, DAV, American 
Legion, et cetera, and that's that they have been most helpful 
in going out and touching these homeless people, and providing 
them with clothes. And a lot of them have received jobs through 
our veterans' organizations. 

That's why I encourage, when I go around the state — 
I've been to 44 cities, and I've spoken to 30,000 veterans and 
other folks . And what I encourage those veterans that don ' t 
belong to the American Legion, or the VFW, or DAV, to join, 
because, as you know, sir, the strength of the various veterans' 
organizations in the state is around 500,000. So, we have 3 
million veterans in the State of California. That means there's 
two point some million veterans out there that don't belong 
veterans ' organizations . 

A lot of them, if they would just join, and even 
visit some of the organizations that are established, the State 
Commanders can help them get jobs. We have done that -- I 



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1 shouldn't say "we". The State Commanders have told me they have 
provided jobs to a lot of our veterans that have come forward. 

3 A lot of the veterans just don't come forward, and I 

4 want to reach out and get them. I really do. 

5 SENATOR PETRIS: Finally, on the Veterans Home, like 

6 Yountville, how is the operation -funded? Is that state General 
Fund? You said you don't get any federal money. 

COL. VARGAS: We do. It's 49 percent is General 
Funding, and 51 percent is — it's federal reimbursements 
10 through the federal, and Medicare, and so forth. 

SENATOR PETRIS: Individual benefits accruing to each 
person. 

COL. VARGAS: That's right. 

SENATOR PETRIS: Thank you. 

COL. VARGAS: Before I let you go, sir, I do want to 
let you know that we have fully implemented Senate Bill 986, the 
Petris bill, and begun holding appeals hearings under its new 
guidelines . 

You're right. When I walked into the job, one of my 
first decisions on day three was to settle the Oakland fire 
business. To me, that was putting veterans first, and to me, 
that was making us whole again. 

SENATOR PETRIS: Well, I appreciate that. 

COL. VARGAS: Thank you, sir. 

CHAIRMAN LOCKYER: Other questions? Senator Ayala. 

SENATOR AYALA: First let me say, this is the first 
time I would ever dare question a Colonel in the United States 
Marine Corps . 



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[Laughter. ] 

CHAIRMAN LOCKYER: At least publicly. 

SENATOR AYALA: Colonel Vargas, there is a move afoot 
to change the composition of the Veterans Advisory Council. 

What is your position on that? 

COL. VARGAS: I personally feel that the California 
Veterans Board should remain as the one and only Advisory Board 
to the legislation [sic] and the Governor. 

And the reason that I say that is that over 80 
percent of the veterans throughout the State of California are 
nonveterans — excuse me, that don't belong to veterans' 
organizations . 

I also believe that, or I know, the California 
Veterans Commanders Council does not represent all the major 
veterans' organizations. Many of the larger groups, such as the 
American Legion, DAV, Vietnam Veterans of America, are not 
represented in that particular bill, and that's AB 3113. 

On a personal opinion, that's my job. I really 
believe that the veterans ' organizations already have access to 
the legislation. They already have access to the Governor. 

And bottom line, I truly believe that it's my job to 
advise the Governor and the legislation [sic], along with the 
State Commanders, on veterans' affairs. The Cal Vet Board is a 
proven vehicle, mechanism, that works very well for the 
legislation and the Governor and myself. They've given me some 
good advice. We have a tremendous relationship. 

I'm concerned about certain — this new advisory 
organization that they're trying to propose to pass, I'm against 



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1 it. I oppose it. 

2 I already have worked with the veterans ' 

3 organizations, and they have come to me, the State Commanders, 

4 | and I in turn have gone to them, and we have a tremendous 

5 relationship. And I just enjoy working with the State 

6 Commanders , and I think that ' s the way to go . 

7 Whenever they tell me to run across the street to see 
any of the Senators, or any of the Assemblymen, I tell them I'm 

9 available 24 hours, and I do it. 

10 SENATOR AYALA: So you feel that the current system 

is not broken and doesn't need fixing. 

COL. VARGAS: It's not broken, sir. It's just that 
somebody had to get in there and kick a little fanny and get it 
going again. 

SENATOR AYALA: You also heard that there is another 
move to elevate your position from Director to Secretary, to 
give it cabinet status . 

Do you have any opinion on that? 

COL. VARGAS: Can the Governor hear me on this one? 

[Laughter. ] 

COL. VARGAS: Well, let me say that I'm well aware of 
what took place at the national level , and there are some other 
states that have done so. 

First, let me assure everyone that I have a very good 
relationship with the Agency Secretary Kozberg, and I had a 
tremendous relationship with Secretary Smoley. And I have 
almost an open door policy with the Governor, but I don't bother 
and I don't abuse it. But if I really had to get in there, I 



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know darn well that he would let me in to chat things with him. 

So, I have a good communications route with you all, 
the Agency and the Governor. 

I believe some of the veterans ' organizations might 
see this enactment as a major step by the Legislature and the 
Governor toward giving veterans more status within the state 
government . 

Again, I kind of feel that's my job, to make sure 
that we all understand the needs, the desires of the veterans 
throughout the state. 

But this measure, and that's AB 2597, I believe, by 
Assemblyman Statham, I don't know. I don't think it would 
improve the access of the Director to the Governor — and here 
I'm going to stick my neck out — unless the Director was given 
a cabinet status . 

If Governor Pete Wilson came up to me and said, "Jay, 
I'm thinking about making your position an independent position, 
and I'm going to elevate it to cabinet level. Would you take 
it?" You're damn right I would. 

SENATOR AYALA: Currently you answer to the Director 
of Consumer Affairs. 

COL. VARGAS: Yes, sir. 

SENATOR AYALA: And in a cabinet position, you would 
deal directly with the Governor. 

That wouldn't give the veterans a little more access 
than the current — 

COL. VARGAS: Again, I have a good relationship with 
Agency. When it's an item that I have to get right into the 



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1 Governor's Office, or to your office, I always touch base with 

Secretary Kozberg, and I do get in. 
3 SENATOR AYALA: You have no problems with that. 

COL. VARGAS: I don't. 

But if you're asking me what would be my personal 
opinion, I believe the cabinet status is something that has to 
be looked at in the future, because we're dealing not with just 
3 million veterans in the State of California. You multiply 
that times two or maybe even three, and you're up around 8 
million veterans that I'm responsible for. At least, I believe 
I want to be responsible for. 

SENATOR AYALA: I have two questions about the Napa 
Veterans Home . 

One is the fact that I've had some correspondence 
from residents of the Home that feel they should have a single 
residence instead of having to share their room with someone 
else. 

Is the Home at Barstow going to be considered to have 
just one-room residence for the members? 

COL. VARGAS: By law, in accordance with the Veterans 
Department, we have to have two in a room, and it is by law. 

I wish — and I know that Captain Reber out at 
Yountville wished that he could put one individual in a room. 

If I had more money, we might be able to do that, but 
I believe — I can't find the answer as to why it's that way. I 
have to go back to the buddy system; I really do. It's that you 
have two individuals in a room, and they can care for each 
other. And at the age of 65, 70, it doesn't hurt to have a 



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roommate . 

I know I hated it when I was going to Arizona State 
University. I had to have a roommate. I was hoping that he 
would get married, or run away, or quit school. 

But I wish we could, and I know that Captain Reber 
wishes that we could. And I get letters, too, and I get phone 
calls. But statute, law, that's what the anchor is. 

SENATOR AYALA: The gentleman that wrote to me in a 
letter yesterday, among other things, he said that his buddy 
snores so loud, he can't sleep. So, he would like to have a 
single room. 

The other thing is, can you tell us about the golf 
course at the Home? There ' s some controversy connected with 
that. Can you tell us a little bit about that? 

COL. VARGAS: Yes, sir. Before I leave here, I'm 
going to give each one of the Senators a short point paper and a 
long point paper on this issue, because I don't know where it 
started, and it might be within the membership itself out there, 
but there are some folks that are against this gold course . 

The benefits to the state and to the members are 
tremendous. And I'll start with the state. Between — well, 
let me start with the lease. The lease was signed 10 February 
'94. The terms were for 30 years with three 10-year renewal 
options . The bid went out to competitive bid with an award to 
Mr. Inger in 1985, so this has been ongoing. 

And during — after Mr. Inger had won the initial 
bid, the environmental study had to go forth, and then he passed 
away. And then the issue just kind of — just kind of dropped. 



40 

And then Mrs. Inger, through some consultants of 
hers, approached us again that she would like to go ahead and 
put the golf course in. The builder is called R.B. IMO, 
Incorporation [sic]. A lot of people have been calling me, "My 
gosh, is that a foreign investment corporation?" No, it's not. 
It's Reynolds and Brown, a Concord, California development firm, 
and the word IMO is, Imogene Inger is the name of the widow of 
the original bidder, and the builder is going to be R.B. IMO 
Incorporation . 

And the rent, the minimum rent is $25,000-80,000 
revenue per year, estimated at likely to return of 68,000 the 
first year, up to 140,000 at the fifth year and thereafter. 

Is it legal? It is legal. It has been in accordance 
with Sections 1023 Bravo of the Military and Veterans Code, 
which authorizes this lease with the terms and conditions deemed 
by the Director to be in the best interest of the Home. 

The current use of the 60 acres of where this golf 
course is going to go into is primarily just growing hay. 
There's a farmer that plants it and cuts it each year. 

The Home ' s driving range is nearby and employs four 
members . There ' s also a short-term lease that we have with a 
balloon association for landing rights, returns approximately 
$250 per month, but this is a lease that's month by month. 

Now the benefits. For the state, the benefits are 
68,000-140,000 revenue a year after it opens. All Home's water, 
treated water, is disposed of. They will use this water to 
water the golf course at no cost to the state. Traffic on the 
Home property will be reduced. 



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And this provides also what I'm very proud of, 
recreation for some of the taxpayers who live nearby who support 
the Home to go out and hit the golf ball. 

Now for the members, this is a tremendous asset for 
the members. They get free golf three days a week between the 
hours of 2:00-5:00. There's a free driving range that provides 
more jobs for the members to work at the golf course. Right 
now, there's four that are employed by Captain Reber that run 
the driving range. Mrs. Inger will hire up to eight more, four 
to eight members that will run the driving range. 

The company, the construction company, is going to 
relocate the garden that the members of the Home have at this 
time. They're going to move it to a new site, till it, 
fertilize it, even offer some plants to get it going again. 
They're going to have a display room in the club house at the 
golf course, and Mrs. Inger — I should say R.B. IMO is going to 
have an annual post fund charity golf tournament sponsored by 
the owners, with charity auctions, and all proceeds will go to 
the post fund. 

And a new outdoors sports arena — or, not arena, but 
an area is being put together by the construction company that 
will have bocci ball, picnic areas. It's all going to be 
provided by the developer. 

Have the members been communicated with? Yes , they 
have. Since 1985, the administrator of Yountville has kept 
these people informed all the way through, and as of October 
through December — I should say January of this year, they have 
been kept informed. And I don't know what the heck — who's -- 



42 

1 maybe it ' s a nongolfer who got hit by a golf ball when he was a 
ittle boy and he just hates golf courses, but what a tremendous 

3 asset this is going to be for Yountville. 

4 SENATOR AYALA: I think that was the main criticism, 

5 that the project was approved, and the contract was signed, the 

6 least, and then it was posted in the Home two weeks later. 

7 You just got through telling us that the whole thing 

8 surfaced in 1985. 

9 COL. VARGAS: Yes, sir. 

SENATOR AYALA: And ever since, you've been letting 

the people know what's going on. 

COL. VARGAS: Captain Reber has done a tremendous job 
in keeping the President of the Council informed, the 
memberships informed, and just before we signed off on the 
contract, meetings were held by him with the whole membership. 
It's a done deal, and it's going to go forward, and I wish I 
could put a golf course around every home that we're going to 
build in the future because it's a money maker. 

The state, the monies will go into the General Fund. 
The lease says that the Director will have a bid to approach 
them to see if I can get some money out of that check every 
month to throw into the post fund to benefit the post fund, 
which I intend to do. And if I don't get that chance, I'm going 
to raise a little hell about it. 

That's all if have, sir. 

SENATOR AYALA: Thank you, Colonel. I appreciate 
your answers . 

CHAIRMAN LOCKYER: Are there other questions from 



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1 Members? 

2 I know there are a number of people here who are 
supportive. Rather than to ask for testimony, because my guess 

4 is that the Committee's ready to move along on this matter, if 
that's acceptable to Members of the Committee, we'll just 

6 acknowledge the many, many representatives who are present from 
veterans' organizations and other places. We appreciate your 
involvement, and we'll expect to hear from you if there are 

9 problems , too . 

May I just ask in conclusion, how are you trying to 
improve matters for women veterans? What specific content does 
that idea have? 

COL. VARGAS: We have within the State of California 
— and at my first speaking engagement, I ran into a lady 
veteran who has never come forth for her benefits ever. She was 
misinformed. She said her husband never wanted her to — for 
her to admit that she had — was a woman Marine. Why, I don't 



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Two days later, we had her benefits. I had had my 
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service officers get hold of her, and she's receiving her 
benefits today. 

In the 44 cities that we have gone to, and my team 
members that have gone throughout the state, we're finding more 
and more lady veterans who have never applied for their 
benefits. And we can't figure it out. So, we're going with 
newspaper articles — 

CHAIRMAN LOCKYER: Informational — 

COL. VARGAS: — information T.V. And by the way, on 



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1 our marketing program, I'm getting it both in English and 

Spanish, and whatever other language people might want to hear, 

3 but we're telling them about it. 

4 And since — over the past five months, I think we've 

5 had 40; 40 lady veterans that have never come forward, and they 

6 have since, and we're helping them now. 
| We're very proud of that, and there's more out there, 

and I wish we could reach them all . 

9 CHAIRMAN LOCKYER: Let me inquire. We know there are 

! plenty of supporters present. Our record shows no opposition 

that's been sent in, but I should ask if there's anyone of that 

sort who'd wish to comment? 

What's the pleasure of the Committee? 

SENATOR CRAVEN: Mr. Chairman, I'd like to move the 

nomination of Colonel Vargas . 

CHAIRMAN LOCKYER: Call the roll, please. 

SECRETARY WEBB: Senator Ayala. 

18 SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 
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SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Five to zero. 

CHAIRMAN LOCKYER: Keep up your fine work. 



45 



COL. VARGAS: Thank you, sir. I'm honored. 
[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
4:15 P.M. ] 

— 00O00 — 



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46 
CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

„ IN WITNESS WHEREOF, I have hereunto set my hand 
this Cx i3 day of March, 1994. 




EVELYN' J , 
Shorthand Reporter 



251-R 

Additional copies of this publication may be purchased for $5.00 per copy 
plus 7.75% California sales tax. 

Senate Publications 
1020 N Street, Room B-53 
Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 251-R when ordering. 




/ 
// 



a 



4 






'A 



'S 



^HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 



MONDAY, APRIL 4, 1994 
2:35 P.M. 



pfv^iMCMTS DEPT. 

APR 2 6 1994 

PuuUC LIBRARY 



252-R 



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SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



X 

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12 STATE CAPITOL 

13 ROOM 113 



HEARING 



SACRAMENTO, CALIFORNIA 



MONDAY, APRIL 4, 1994 
2:35 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



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3 



APPEARANCES 
MEMBERS PRESENT 
SENATOR WILLIAM LOCKYER, Chair 
4 SENATOR WILLIAM CRAVEN, Vice Chair 
SENATOR RUBEN AYALA 
SENATOR ROBERT BEVERLY 
SENATOR NICHOLAS PETRIS 



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STAFF PRESENT 
CLIFF BERG, Executive Officer 
PAT WEBB, Committee Secretary 
RICK ROLLENS, Consultant on Bill Referrals 
NANCY MICHEL, Consultant on Governor's Appointments 



14 ALSO PRESENT 

15 

16 



CURTIS L. AUGUSTINE, Chief 

Bureau of Electronic and Appliance Repair 

Department of Consumer Affairs 



GEORGE MEESE, Member 

Unemployment Insurance Appeals Board 

JESSIE J. KNIGHT, JR., Member 
Public Utilities Commission 

SENATOR QUENTIN KOPP 

SENATOR HERSCHEL ROSENTHAL 



DONALD D. DOYLE, President 

Junior Achievement of the Bay Area 



PERRY 0. JOHNSON, Member 

Workers ' Compensation Appeals Board 

WILLIE WASHINGTON 

California Manufacturers Association 

MELISSA R. BROWN 

California Applicants ' Attorneys Association 



Ill 



1 



APPEARANCES ( Continued ) 



BARRY WILLIAMS 

California Applicants ' Attorneys Association 

JACK HENNING 
4 California Labor Federation 

CHARLES J. REITER, Legislative Director 
State Building and Construction Trades Council 
6 of California 

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INDEX 

Page 

Proceedings 1 

Governor ' s Appointees ; 

CURTIS L. AUGUSTINE, Chief 

Bureau of Electronic and Appliance Repair 1 

Background and Experience 1 

Questions by CHAIRMAN LOCKYER re: 

Types of Disciplinary Actions 2 

Bureau ' s Response 2 

Negligence vs. Fraudulent 3 

Penalty with Administrative Discipline 3 

Procedure in Other States 4 

Need for Bureau 4 

Follow-up after Disciplinary Actions 5 

Questions by SENATOR AYALA re: 

Percentage of Staff Investigating in 

the Field 5 

Bureau's Disciplinary Actions 5 

Motion to Confirm 6 

Committee Action 6 

GEORGE MEESE, Member 

Unemployment Insurance Appeals Board 7 

Background and Experience 7 

Questions by CHAIRMAN LOCKYER re: 

Backlog of Cases 7 

Observations with Respect to Law 8 

Questions by SENATOR AYALA re: 

Average Waiting Period before Case Comes 

before Board 9 



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INDEX (Continued) 

Tendency of Applicants to Seek Welfare 

Assistance while Waiting for Board Review .... 10 

Staffing Shortage 10 

Motion to Confirm 11 

Committee Action 11 

JESSIE J. KNIGHT, JR., Member 

Public Utilities Commission 11 

Introduction by SENATOR QUENTIN KOPP 11 

Background and Experience 13 

Questions by SENATOR AYALA re: 

Balancing Obligations to Consumers and 

Regulated Industries 20 

Devotion to Consumer Sector 21 

Questions by SENATOR HERSCHEL ROSENTHAL re: 

Opinion on Lower Court Judicial Review 

of PUC Decisions 2 2 

Ex Parte Contacts 2 4 

Need for Public Disclosure in Advance of 

Alternative Decisions 2 7 

Opinion on Public Access and Open Meetings 

in Light of Attorney General's Recent 

Opinion 2 8 

Role of Government regarding Information 

Super Highway 30 

Questions by SENATOR AYALA re: 

Brown Act vs. Bagley-Keene Act 31 

Questions by CHAIRMAN LOCKYER re: 

Activity in Other Technological Areas 32 

Role of PUC in New Technologies 32 

Proposals to Change Jurisdictions of 

PUC and Energy Commission 3 3 



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VI 

INDEX t Continued^ 

Toughest Decision while on PUC 3 3 

Witness in Support: 

DONALD D. DOYLE, President 

Junior Achievement of the Bay Area, Inc 34 

Motion to Confirm 35 

Committee Action 3 6 

PERRY 0. JOHNSON, Commissioner 

Workers' Compensation Appeals Board 3 6 

Background and Experience 36 

Questions by CHAIRMAN LOCKYER re: 

Cases Reflecting Recent Changes 

in Law 3 9 

Terminology re: Judges, Hearing Officers, 

or Referees 40 

Most Troublesome Decisions 40 

Areas Where Law Should Be Different 4 3 

Witness in Support: 

WILLIE WASHINGTON 

California Manufacturers Association 45 

Witnesses in Opposition: 

MELISSA BROWN 

California Applicants' Attorneys Association 4 7 

Questions to MR. JOHNSON by CHAIRMAN 
LOCKYER res 

Pattern of Dissenting in Favor of 

Employer in 35 out of 36 Cases 4 9 

Questions to MS. BROWN by SENATOR 
CRAVEN re: 

Prescribed and Proscribed Boundaries 

in the Law 4 9 

Options Available for Interpretation 

of the Law 5 



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VII 

INDEX (Continued^ 

Criticism of One Who Has Found 

Standard in Own Mind within Law 51 

Ability to Appeal if WCAB Misapplies 

Law 52 

Resumption of Testimony of MS. BROWN . . ' 53 

Questions by SENATOR CRAVEN re: 

Number of People Sitting in Judgment .... 54 

Number of Times Actions of Nominee 

Have Adversely Affected Injured Worker ... 54 

BARRY WILLIAMS, Member 

Board of Governors 

California Applicants' Attorneys Association 56 

JACK HENNING 

California Labor Federation 6 

CHARLES REITER, Legislative Director 

State Building and Constructions Trades 

Council of California 61 

Summation by MR. JOHNSON 6 2 

Garza Rule 62 

Thompson Vs. City and County of 

San Francisco 63 

Boyd Vs . Chevron 63 

Participation in over 1500 Cases 65 

Request for Evaluation of Complete Record .... 65 

Statements by CHAIRMAN LOCKYER re: 

Pattern of Anti-worker Bias in Decisions 6 6 

Misplaced Advocacy in Judicial Setting 66 

Motion to Confirm 6 7 

Committee Action 6 7 

Termination of Proceedings 6 7 

Certificate of Reporter 6 8 



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P-R-O-C-E-E-D-I-N-G-S 
— 00O00-- 

CHAIRMAN LOCKYER: I guess we're to the business of 
reviewing the Governor's appointees. The first is Curtis 
Augustine . 

Why don't you tell us about yourself and why you'd 
like to continue doing this job you've been doing? 

MR. AUGUSTINE: Mr. Chair and Members, thank you for 
this opportunity to appear before you today as the nominee for 
the Chief of the Bureau of Electronic and Appliance Repair. 

At the beginning of his administration, Governor 
Wilson asked that we put the word "consumer" back into Consumer 
Affairs. We at the Department of Consumer Affairs are committed 
to stronger enforcement, better licensing, and a more efficient 
way of doing business. 

At this time, I would like to discuss the experience 
I bring to this position. Prior to my appointment in October, I 
was the Bureau's Deputy Chief since May of '1991. During the 
past three years, we have made significant improvements in our 
consumer protection efforts. For example, our efforts have 
resulted in a 77 percent increase in overall enforcement 
actions, a 700 percent increase in citation and fines written, 
creation of criminal infractions for unregistered dealers, 
initiation of legislation to disconnect telephones for illegal 
activities, and the initiation of legislation to regulate 
service contracts. 

I am grateful to have been part of the Consumer 
Affairs success the past three years. Under my direction, the 



7 



Bureau will continue to play a major role in protecting the 
i consumers of California with our ongoing emphasis on 
enforcement, and the education of consumers and the industry. 

4 Thank you for your consideration, and I'll be happy 

5 to answer any of your questions. 

6 CHAIRMAN LOCKYER: When you talked about the 
percentage increase in enforcement, I guess I have some data 
here, were these sort of administrative disciplinary actions? 

MR. AUGUSTINE: Yes, they would be both 
administratively as well as criminally. We've had an increase 

11 in all our enforcement actions. 

12 CHAIRMAN LOCKYER: And those you refer out to 
district attorneys? 

MR. AUGUSTINE: Yes, the criminals, yes, sir. 
CHAIRMAN LOCKYER: So, it went from a total of 37 to 
a total of 60 in two years. 



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CHAIRMAN LOCKYER: What did those 60 people do? How 
did you find out that there was a problem, and what did you do 



20 about it? 

MR. AUGUSTINE: Through most of our actions, they 

22 



either generate through consumer complaints or our own 
investigators are going out and doing spot inspections and 
generating these leads on their own. But the vast majority are 
found through consumer complaints . 

We then work those consumer complaints, and finding 
that there's two major areas that we would take any action 
against would be fraud and incompetence and negligence. 



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CHAIRMAN LOCKYER: Can you break that down into which 
you think is fraudulent and which negligent? 

MR. AUGUSTINE: Right. I would say about 55 percent 
would be the incompetence/negligence, and 45 percent would be 
fraud. 

CHAIRMAN LOCKYER: What's the penalty when there's 
some administrative discipline? 

MR. AUGUSTINE: Yes, when we develop a case that we 
present to the Attorney General to be taken administratively, 
usually the merits of the case are such that we ask for a 
revocation of the license. 

CHAIRMAN LOCKYER: Would you look at some pattern of 
activity? Let's say you get a complaint from a consumer about a 
business. Do you then look through the files for similar repair 
jobs and contact people, or how does this work? 

MR. AUGUSTINE: Yes, the field investigator handles a 
particular territory, and he's quite familiar with all the 
service dealers in his area. When we receive a complaint, the 
first thing we do is enter it in and check to see if there are 
any other complaints against this particular business. 

If there are, the investigator then looks to see if 
there's a pattern, and it becomes apparent that some action is 
going to be required if he has demonstrated that pattern. 

CHAIRMAN LOCKYER: There are a lot of these people in 
the state; right? 

MR. AUGUSTINE: Unfortunately, there are more than 
there should be, sir. 

CHAIRMAN LOCKYER: Close to 20,000 licensees, when 



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you count the expansion of service contracts. 

MR. AUGUSTINE: Yes. There is — that would be the 
actual licenses issued. Some of the businesses would actually 
have both sets of licensure. They would sell service contracts 
as well as repair. 

CHAIRMAN LOCKYER: It might be one license, but a 
whole bunch of people that work there doing equipment repair. 

MR. AUGUSTINE: Oh, yes. We just register the 
business, so there could be a number of services under that. 

CHAIRMAN LOCKYER: Do a lot of other states not 
bother to do this? 

MR. AUGUSTINE: Most states do not; however, the 
State of Michigan and the State of Arizona are presently looking 
into that, and they've asked me for all the information we have, 
and copies of our legislation. They feel that they're going to 
proceed with that in their states . 

CHAIRMAN LOCKYER: Do we have any way of knowing 
that, if you look in what seem to be a majority of the states 
where they don't do this, are consumers better off here than 
they are there? 

MR. AUGUSTINE: No. I think that my contact with 
other consumer leaders in other states feel that there is a need 
there. 

In fact, a registered dealer that we revoked recently 
picked up shop and went to Arizona because he knew he could get 
away with it there and not here. 

CHAIRMAN LOCKYER: So, you wouldn't recommend 
deregulation of this? 






MR. AUGUSTINE: No, unfortunately, I wouldn't, sir. 
I'm afraid that there is enough consumer fraud going on out 
there that, without our watchdog efforts, that consumers would 
be prey to additional fraud. 

CHAIRMAN LOCKYER: Is there any method of following 
up? Once you discipline someone, does the field personnel check 
periodically to see what they're doing? 

MR. AUGUSTINE: Yes, we do. We follow up on that, as 
well as we have an unregistered activity unit that searches for 
anyone, so if they had had their license revoked and they're 
advertising, we've obviously not given them their license back, 
and we would pursue them that way. 

CHAIRMAN LOCKYER: Are there other questions? 
Senator Ayala. 

SENATOR AYALA: What percentage of your staff is 
actually observing, investigating in the field? 

MR. AUGUSTINE: Of our staff, we have ten people 
whose efforts are devoted to nothing but enforcement, and 7 
percent of our budget is spent on enforcement operations . 

SENATOR AYALA: What discipline actions does the 
Bureau take in terms of violations or abuses of repairs? 

MR. AUGUSTINE: When we prepare a case, without 
nearly any exceptions, we are asking for a revocation of the 
license. And if we are going after criminal action, we will 
file under the appropriate misdemeanor codes. 

SENATOR AYALA: You can take away their license to 
operate? 

MR. AUGUSTINE: Yes, we can; yes, we do. 



SENATOR AYALA: Thank you. 
■ CHAIRMAN LOCKYER: Is there anyone present who would 

3 wish to comment, either for or oppose? 

4 What's the pleasure of the Committee? Senator 

5 Craven . 

6 SENATOR CRAVEN: Move. 

7 CHAIRMAN LOCKYER: Move we recommend confirmation. 

8 Did you want to add anything? 

9 MR. AUGUSTINE: No, thank you, sir. 

10 CHAIRMAN LOCKYER: Let's call the roll. 

SECRETARY WEBB: Senator Ayala. 
SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 
SENATOR BEVERLY: Aye. 
SECRETARY WEBB: Beverly Aye. Senator Petris . 



16 Senator Craven. 



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SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Four to zero. 



21 CHAIRMAN LOCKYER: Thank you. 

22 MR. AUGUSTINE: Thank you. 

23 



CHAIRMAN LOCKYER: Mr. Jessie Knight is the next one. 

SENATOR KOPP: I had advised him it would be 3:00 
o'clock. He will be here momentarily. 

CHAIRMAN LOCKYER: We'll have you stand down and wait 
a minute. 

George Meese . 



1 



MR. MEESE: Good afternoon, sir. 



2 CHAIRMAN LOCKYER: Good afternoon. 



Do you want to tell us about this job, why you like 
it, and should you be appointed? 
5 MR. MEESE: Well, I've been here about eight years 

now, Mr. Chairman, and I've appeared before the Rules Committee 
before, as you know, and I appreciate your support. 

For this particular hearing, I'm very thankful to 
have the support of the Association of California State 
Attorneys. I trust they have perceived me to be reasonable, 
fair, and impartial in the performance of my duties on the 
Board. I trust that I have been, and that's what I've tried to 
do. 

So, I'm here again and very much appreciative of your 
-- would very much appreciate your support one more time. I'd 
be happy to answer any questions you might have. 



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CHAIRMAN LOCKYER: Are there questions from Members? 



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While they review the materials, Mr. Meese, maybe you 
could comment on the problem of the backlog of cases before the 
Board, and what seems to be happening to address that? 

MR. MEESE: The backlog is -- I don't believe we have 
a backlog now. We are meeting the timelines required by the 



23 federal government 

Sometime ago we did, approximately two years ago. 

25 



With massive hiring of attorneys and clerical staff, we have met 
that challenge now, and as I say, we have met timelines. We've 
just about doubled our attorney staff and doubled our clerical 
staff . 



8 

CHAIRMAN LOCKYER: So you staffed up? 

MR. MEESE: Yes. 

CHAIRMAN LOCKYER: Is it satisfactory now? 

MR. MEESE: Yes, and I believe very shortly we'll be 
going on the down side now. We hired temporary people in great 
number, and it looks like very shortly we will be able to go in 
the opposite direction. 

CHAIRMAN LOCKYER: Maybe you could just, while we 
have you, reflect for a moment. You've now seen a lot of cases. 

MR. MEESE: Yes. 

CHAIRMAN LOCKYER: I guess thousands of them, in 
effect, over the years that have come by. 

Do you have any observations to make with respect to 
the policy, not so much the administrative functions, but does 
the law seem fair to you? Are there troubling cases that you 
wish you could provide a benefit, but you can't, or vice-versa, 
where you don't think a benefit should be conferred, but the law 
seems to necessitate that decision on your part? Anything that 
comes to mind that would be constructive for us in reviewing the 
law from time to time? 

MR. MEESE: We do have some leeway, I think, in most 
of the cases where -- I think of the case where a person has 
been promised a job someplace, and so he gives his resignation, 
and all of a sudden, the new employer tells him that he really 
doesn't have a job. So technically, he did not really have that 
job, but generally we do pay benefits because he was unemployed 
through no fault of his own. 

Probably, if I had 15 minutes or a half hour away 



9 

from this particular area, I could think of many more. 

CHAIRMAN LOCKYER: None that just seem to offend — 

MR. MEESE: No. 

CHAIRMAN LOCKYER: — or the law isn't right, in your 
view, that you see come by? 

MR. MEESE: I can't think of anything right now, I'm 
sorry. There probably are some. 

CHAIRMAN LOCKYER: That's a good answer. 

If you ever notice that in the course of your duties, 
that you think the law perhaps should be reviewed, I hope you'll 
let us know. 

Are there questions at all? Senator Ayala. 

SENATOR AYALA: Given the current backlog, how long 
should a person expect to wait before their case comes before 
your Board? 

MR. MEESE: The law requires now that we have 80 
percent of our cases out within 75 days, and we're meeting that. 

SENATOR AYALA: What percentage, 75? 

MR. MEESE: It's 80 percent in 75 days, and we're 
making great headway in getting 40 percent in within 45 days. 

SENATOR AYALA: Is that about average, normal, high? 
What is the backlog? 

MR. MEESE: Actually, we don't have a backlog as such 
right now. because of the increase of staffing, we're meeting 
what we had met prior to the large increase in the unemployment . 

At one time we were — there was a great delay in 
people getting hearings, but that's no longer the case, that 
people have to wait a long, great deal of time for their 



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hearing. 

2 SENATOR AYALA: But the average time an applicant has 

to wait today is about 75 days after they terminate their job? 

MR. MEESE: If they are turned down for benefits and 
appeal that, then many of them are heard within 45 days, and 
some take as long as 75 days. 

SENATOR AYALA: That's two months, at least two 
8 months, or thereabouts. 

MR. MEESE: That's correct. 

SENATOR AYALA: Doesn't that have a tendency to have 
people go and seek welfare instead while they're waiting for 
their case to be heard? 

MR. MEESE: I guess they have to do something. Of 
course, they do get the money later on if they were found to be 
entitled. 

Most of the people who are denied benefits are denied 
benefits [sic] and they don't get them later on, probably around 
ten percent. 

SENATOR AYALA: You're saying you're short of 
manpower, that's why the delay is so great? You don't think 



21 it ' s a long time? 

MR. MEESE: It is a long time. Any amount of time 
23 



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would be a long time. 

SENATOR AYALA: Due to the fact that you don't have 
the people to work with? 

MR. MEESE: I guess it probably would be impractical 
to hire more people to get that down, but it would benefit so 
very few as far as overturning the decision of the Department. 



11 

SENATOR AYALA: Thank you. 

CHAIRMAN LOCKYER: Is there anyone present who would 
wish to comment with respect to this confirmation? 

What's the pleasure of the Committee? 

SENATOR CRAVEN: Move. 

CHAIRMAN LOCKYER: Senator Craven moves positive 
recommendation . 

Call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 
Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Four to zero. 

CHAIRMAN LOCKYER: Thanks, George. 

MR. MEESE: Thank you very much. 

CHAIRMAN LOCKYER: Senator Kopp and Mr. Knight. 

SENATOR KOPP: Thank you, Mr. Chairman. 

Mr. Chairman, Members of the Committee, it is a 
personal privilege to present to you for a recommendation for 
confirmation in the highest traditions of advising and 
consenting to a gubernatorial appointment, this to the Public 
Utilities Commission, Jessie J. Knight, Jr., whom I've known 
since 1985. 



12 

He's compiled a series of credentials in private 
business and the business sector which include some -- 

CHAIRMAN LOCKYER: Pineapples. 

SENATOR KOPP: Pineapples, Castle and Cooke, and 
Dole. 

I met Mr. Knight in 1985 when he came to San 
Francisco with the San Francisco Newspaper Publishing Company, 
and he is solid. And then he became associated with the Greater 
San Francisco Chamber of Commerce. Mr. Don Doyle, former Member 
of the California Assembly, and former Executive Director of the 
Chamber of Commerce, is present, Mr. Chairman, also a dear 
former colleague of at least some of the Members of this 
Committee. And he worked as Vice President under Mr. Doyle's 
aegis, and as indicated, he was appointed to the PUC about seven 
months ago. 

As you know, Mr. Chairman, I have a bill pending in 
the Senate Judiciary Committee, which you're a co-author of, 
Senator Rosenthal, and that would allow the Court of Appeal to 
accept Petitions for Review. It's noteworthy to me that the PUC 
has taken no position of opposition to that salutary measure. 

Mr. Knight's activities in the community are 
different. They are broad-sweeping. You will note, Mr. 
Chairman and Members, that in 1991, for example, he was the 
Grand Marshal of the Chinese New Year Parade in San Francisco. 
I don't want to hear any titters from this audience, because 
that's a solemn event, attended by about 400,000 people. 

For Senator Craven's benefit, if no one else's, he's 
a Dominican, graduate of St. Louis University. No, he didn't 



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play for Ed Hecky, but in any event, he probably could have. 

SENATOR CRAVEN: Tell me why he started his schooling 
in Madrid, according to what I'm looking at, which is kind of 
the home field for Augustinians , not Jesuits who educated him 
when he got to St. Louis? 
6 [Laughter.] 

SENATOR KOPP: He'll respond to that question, 
Senator Craven. 

But in sum, I'm here because I believe very strongly 
in Mr. Knight's qualifications. I hope to be able to vote for 
his confirmation on the Senate Floor, and I commend him to you 
in all earnestness and with genuineness. 

Of course, he is here to present his own credentials 
in his own way, and to answer the questions, and there are other 
witnesses who are here in support of his confirmation as well. 

CHAIRMAN LOCKYER: Thank you very much, Senator Kopp . 
We appreciate your recommendation. 

We finished, I guess, the Talmudic phase. We're 
going to shift to the Jesuitical phase with Senator Craven's 
inquiry. 

Senator, I know you have a bill in Judiciary, and 
we'll excuse you to attend to that. 



23 SENATOR KOPP: Thank you. 

24 CHAIRMAN LOCKYER: Mr. Knight, do you want to kind of 
25 



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give us any general statement to start us? 

MR. KNIGHT: Yes, thank you very much. 

First of all, the Jesuits ran Spain for centuries. 
They still have a very strong mark in Spain, I might add. 



14 

Chairman Lockyer and distinguished Members of the 
Senate Rules Committee, it is indeed a great honor to appear 
before this august body to seek confirmation for the position of 
Commissioner of the Public Utilities Commission. 

First let me say that the most important 
qualification that I bring to the Commission is a strong 
commitment and dedication to make a significant contribution to 
helping you, your colleagues, and the hundreds of other 
dedicated public servants, to allow California the opportunities 
to recapture economic leadership. 

Not only was it an honor to be called to serve by 
Governor Wilson, it has also been inspiring to receive a 
ground swell of diverse support as I embark upon this tough 
journey. From all over California, people in business, big and 
small, nonprofit organizations, educators, and just plain, old, 
everyday good citizens have taken the time to write letters of 
support in my behalf. I must always keep in mind that it is 
these individuals and the great people of California for whom I 
serve . 

California has been good to me since I came out here 
as a wide-eyed young man out of the University of Wisconsin with 
an MBA in my hands. I came here in search of carving out a 
successful life in the state that held all my lofty dreams. 

I'm proud to claim that I am the son of wise and 
devoted parents who struggled in poverty together. My father, 
who could not make it here on such short notice, is a retired 
railroad laborer who cannot read or write, but is a brilliant 
man who struggled to educate his six children and put fire in 



15 

their hearts to value education, work hard, shoot for the moon, 
and never forget to be willing to help others. 

To some, when I talk like this it may sound a little 
corny or folksy, but it is a Midwestern ethic that I brought 
with me to California in 1975, and it's an ethic that I will 
follow until my dying day. 

Now, I have chosen to totally immerse myself in doing 
the work of the people by becoming a full-time public servant. 
And I believe I have much to give to California, and because of 
my successes and my heritage, I have much to give back. 

When I was approached to accept this challenge six 
short months ago, I recognized the influence my position would 
have on California's economic future. The six months I have 
served on the Public Utilities Commission has presented me with 
economic, financial, and social issues, the resolution of which 
will affect the very character of this state. 

After six months of actual experience, I am 
profoundly reminded each and every day of the crucial role and 
burdens borne by a CPUC Commissioner. It is not a 
responsibility to be taken lightly, and one that is not for the 
faint of heart. 

From the moment I arrived, I've been challenged with 
problems and opportunities that few people have the chance to 
experience over the course of their career. I have found that 
it is a position that requires balance, objectivity, 
intellectual curiosity, and decisiveness. 

I believe my background has prepared me well to 
perform the duties of the office and to faithfully represent the 



16 

best interests of the people of California. I have had 20 years 
of significant managerial experience and accomplishment in the 
private sector. After business school, I worked for 10 years 
for the San Francisco-based Dole Foods Company under the 
multi-billion dollar umbrella of Castle and Cooke, Incorporated. 

The experience afforded me the opportunities to work 
in a wide variety of responsible positions in domestic and 
international business units in finance, operations, marketing, 
business development, and strategic planning. My last job there 
was a three-year stint as Director of Marketing for the U.S. and 
Canadian retail grocery products for all Dole canned pineapple 
and Dole juices. 

After Dole, I spent seven years in the publishing 
business as Vice President of Marketing for the San Francisco 
Chronicle and the San Francisco Examiner newspapers . My 
responsibilities not only involved marketing, but included 
research and development, strategic planning, and public 
affairs. During those years, I greatly increased my outside 
community service activities . 

Two and a half years ago, I left publishing to take a 
position as Executive Vice President for the San Francisco 
Chamber of Commerce. As Executive Vice President of the San 
Francisco Chamber of Commerce, I had the responsibility for 
promoting the City of San Francisco and overseeing the 
organization's international operations, economic development 
activities, business development for small business, and 
handling communications for the 2,100 businesses represented by 
the organization and its 7500 members. 



17 

At the Chamber, my job was extremely challenging. 
The Chamber had embraced a new mission: to attract, develop and 
retain business in San Francisco. I was charged to lead the 
economic vitality team, as we called it, to drive economic and 
business development in San Francisco. 

My volunteer team and I, partnered with other 
business organizations, worked with labor, helped the Board of 
Supervisors fashion pro-business legislation to create and 
attract jobs, educated people to have an international 
perspective, to broaden economic opportunities, and work with 
minority business organizations and neighborhood groups . We 
attracted and retained over 4,000 new jobs in the city, an 
unparalleled success for the entire community. 

I am proud of the members of the San Francisco 
Chamber of Commerce, and proud of my two-year stint there. One 
reason for the success was that we reached out to all segments 
of the city's community and shared our vision on how business 
development would contribute to the overall quality of life. 
This emphasis on common interest required open channels of 
communication . 

As the primary facilitator of this effort, I believe 
there are many lessons to be transferred to the CPUC, and I 
pledge my commitment to this strategy over the next few years . 

Last November, the San Francisco Urban Planning 
Association, SPUR as it is known, San Francisco's leading 
economic development policy think-tank, awarded me its highest 
award, called the Silver SPUR Award, for my contributions 
towards enhancing the city's economic vitality. It is an award 



18 

that I will cherish all of my life, but deserves to be shared 
with many like-minded citizens who worked closely with me to 
achieve quantifiable results in a city which uninformed critics 
labeled as incapable of solving serious problems. 

It is the Chamber model I use as a mental benchmark 
when I face certain issues at the Commission that impact the 
overall economy of California. 

The Chamber experience also highlights what I think 
is the most important facet of my background, and that is a 
life-long commitment to public service that has been 
inextricably linked to my professional background since 1975. 
I presently serve on the boards of a number of nonprofit 
organizations that are dedicated to education, international 
understanding, and helping those in need. I serve on the 
Investment Review Committee of the San Francisco Foundation, the 
Boards of Directors of the San Francisco Committee on Foreign 
Relations, Golden Gate University, the International Visitors 
Center, and the World Affairs Council of Northern California, 
where I am Vice Chairman of the Board. 

I also serve on the Advisory Boards of: Project Open 
Hand, an organization that helps those with AIDS; the Sierra 
Club; the Asia Foundation; and the San Francisco Main Library. 

By drawing upon my community experience to be 
sensitive to the needs of the people, my marketing experience to 
focus on customer needs, and my economic development experience 
to strive for innovation, to create new business opportunities 
and jobs, affords me an unique perspective to approach the 
duties of a Commissioner. My experience gives me the 



19 

opportunity to help my fellow Commissioners usher the agency 
into an era that emphasizes cooperation, consensus and coalition 
building to resolve issues, and to focus on opening up lines of 
communications for all stakeholders. 

The dissemination of technology capital has created 
the potential for competitive markets in some utility 
industries. Where that potential is frustrated, we must 
determine if it is because market imperfections exist that 
prevent competition from emerging, or is it our own regulatory 
reactions that impede the development of competition. 

Where markets are not competitive, the Commission 
must exercise our authority vigorously to protect Californians 
from the abuse of market power. 

Even where competition exists, it is more and more 
important for the Commission to manage and monitor multiple 
providers of utility service so that safety and consumer 
protection issues are addressed. Also, we must be vigilant in 
our ability to safeguard a regulatory environment that allows 
new providers and incumbent utilities to compete fairly. 
However, these trying issues will place a greater emphasis on 
the Commission's priorities and allocation of resources. 

In the most tranquil of times, the learning curve for 
a new PUC Commissioner is a daunting one. It is a herculean job 
with enormous pressures. One must have the intellectual and 
physical constitution to deal with a mountainous caseload which 
is intertwined with complex issues around the industries we 
regulate. Now, new issues are thrown on the plate for us to 
effectively sort out, such as the inevitable restructuring of 



20 

the agency itself, and our ever-present budgetary and resource 
constraints . 

Like my predecessors, I stand ready to accept the 
task before me should you see fit to entrust the responsibility 
to me . 

I thank you, and I'll take whatever questions you may 
have. 

CHAIRMAN LOCKYER: Senator Ayala. 

SENATOR AYALA: Mr. Knight, how do you reach a 
balance between the obligations you have to the consumer and. to 
the company, the California company, that you're obligated to 
regulate? How do you come to that balance? 

MR. KNIGHT: First of all, I think, again, being a 
person not certainly from the utility industry, and one that has 
not been involved in governmental affairs, one of the things 
that I have -- I think that we need to keep in mind as 
Commissioners — and I think a lot of times, sometimes, the 
press forgets this, and sometimes I think people on the outside 
looking at the organization forget -- that the role of a 
Commissioner is to keep that balance. And many, many times we 
are seen as the judge between parties most often. 

The primary responsibility is for us to protect 
consumer interests. And I think, with my past background, 
particularly having been in the food business, I have always 
been a consumerist in the sense that marketing needs really 
dictate what one should be about when dealing with the 
marketplace . 

And I think I have a balanced, objective point of 



21 

view in terms of what those responsibilities are from my 
background. 

SENATOR AYALA: You spent quite sometime with the 
Chamber of Commerce, which is business-oriented, as well it 
should be. 

How about the other, the consumer end of it? How 
much time do you have devoted to that sector? 

MR. KNIGHT: Well, part of the problem the Chamber 
had for a number of years was that it had always been seen as 
the voice of downtown business. And one of the changes that 
took place in the Chamber's mission was for us to recognize that 
that circle, for the Chamber to be successful, that that circle 
had to enlarge, and it had to be far more inclusive. 

San Francisco, as many people know, has been touted 
as a very difficult place to launch any pro-business activities. 
But one of the things that I think we found successfully was 
that by keeping communications open with other organizations and 
neighborhood groups, those who have either a smaller interest in 
some of the more immediate initiatives of the Chamber, but 
keeping a perspective that quality of life is equal to economic 
vitality, that real simple formula in the course of our everyday 
dealings, we were able to expand participation of people who 
were forgotten and, in many ways, the consumers of what Chamber 
activities were all about. 

SENATOR AYALA: Thank you. 

CHAIRMAN LOCKYER: Senator Rosenthal, I know as Chair 
of the appropriate committee, you're interested in this. Do you 
have some questions? 



22 

SENATOR ROSENTHAL: Good afternoon. 

As Chair of the Energy and Public Utilities 
Committee, I've had a long-standing interest in seeing that the 
PUC maintains a fair process and allows public access to the 
decision making process. 

These concerns were heightened last year when the 
Commission allowed utility executives to secretly meet with the 
decision makers and to edit a major telephone rate decision 
which would have greatly benefitted the utilities. The 
Commission voted to accept this tainted decision, even though 
some Commissioners told my committee they had not even seen the 
disputed evidence. 

Now, this scandal brought great embarrassment to the 
Commission. It's still working to re-establish its integrity. 
Fortunately for you, you did not participate in that proceeding. 

However, I'd like to ask you a few questions on your 
views about that PUC process which may now be under 
consideration by the Legislature, because as a result of that 
happening, a number of bills have been introduced in the 
Legislature trying to deal with some of those particular issues. 
In this area I have three questions. 

What's your opinion about a lower court judicial 
review of PUC decisions? 

MR. KNIGHT: Well, let me first back up to the first 
part of your commentary. 

You're right, I was not there then, but I still bear, 
I think, the responsibility, as do my other Commissioners, in 
trying to improve the situation such that things like that don't 



23 

happen again. 

First of all, I think it's important to point out 
that the public has been caught up, I think, overwhelmingly so, 
on what happened there. And even if that unfortunate situation 
hadn't taken place, I think the PUC still would have been under 
tremendous pressures to review its internal processes, because I 
think what is at stake here, and the problem that we have to 
correct, is that the anachronistic approach to regulating 
utilities is rapidly changing. And the process has to be 
changed in that we can come into, I think, a modern world as the 
rules are starting to change. 

For the most part, the process, the way we take 
information for an individual case, needs to be reviewed. We 
are actively pursuing that and looking at what changes can take 
place. 

For the most part, I think we do have a handle on it. 
It's unfortunate that this legislation has been promulgated, 
because I think it's unfortunately trying to cure a part of the 
problem, and I think it goes much deeper than that. And the 
Commissioners are trying to get ahold of this by reviewing the 
entire process, not just concentrating on trying to correct what 
happened in one individual case. 

I will do my part to try to contribute to that, so 
that we manage the process much better than we have in the past. 

The issue of judicial review, I am concerned about 
it. I can understand what the pressure is as building for us to 
do that, but at the same time, we have to be very vigilant that 
we aren't going to extend the process so that we have further 



24 

regulatory delay in coming to decisions. That's a danger, that 
whatever legislation is fashioned to try to deal with this 
issue, that I hope the authors do keep in mind that we need to 
make our organization far more efficient and not put on added 
layers of review when they're unnecessary. 

SENATOR ROSENTHAL: The second is your thinking about 
ex parte contacts. 

A couple of years ago, there was legislation to deal 
with ex parte, and the Commission informed us that they didn't 
need any legislation; they could take care of it in-house, but 
it didn't work. Now the legislation is again introduced to do 
something about ex parte. 

Comment? 

MR. KNIGHT: Well, when I first got to the 
Commission, not being a lawyer, I didn't know anything about 
what this ex parte stuff was all about, and in dealing with my 
colleagues, was educated on what the rules and regulations were 
of the Commission in dealing with them. 

At the beginning, I was certainly of the belief that 
I should be able to talk to anyone at any point in time. But 
over the last few months, I think I have become far more 
educated in terms of what should make the Commission operate far 
more efficiently and fairly. 

When I first got there, I instituted a policy that 
was new, whereby -- not that I ruled out single ex parte 
contacts, but I tried to manage the process by saying: whenever 
there was a case to come forward, that I would only meet with 
parties on both sides of an issue. And I initially did it as a 



25 

time management vehicle, because rather than running from one 
individual ex parte contact to another, I thought it was far 
more efficient for the decision making process for all to come 
together to a tightened agenda, and for each party to be able to 
present their side to an argument. 

It aided me in terms of being able to hone down to 
the key issues, and at the same time, I think it efficiently 
used the time of the parties in order to get their point of view 
across . 

I still think that that model works quite handsomely. 

Again, the risk of putting the -- making a 
legislative mandate, I again only caution that by tying the 
Commissioners' hands to only do things one certain way, I think 
could have a downside in terms of the process. 

I have instituted a quiet time, as we get closer to 
Commission meetings, in that I do not take ex parte contacts, or 
ask parties not to try to set up meetings with my office unless 
there ' s something of an extraordinary nature that would 
materially affect the case. 

So all in all, I think management of the ex parte 
process is important. I'm not sure that we need to put iron 
clad rules on that process, though. 

SENATOR ROSENTHAL: I'm not opposed, nor is anyone 
opposed, to conversations that individuals may or may not have. 
It just seems to me that at some point, there ought to be a cut 
off of some kind before a final decision is made so that 
everybody knows the rules of the game. 

In Washington, for example, before the commission 



26 

there that deals with similar kinds of things, there are 
conversations that take place, but then they're noticed so that 
the opposition at least is aware of the subject matter that's 
being discussed by the others. 

So, I'm not sure what direction the Legislature's 
going to take, but it appears to me, at least, that there ought 
to be some cut off before a decision is made. 

MR. KNIGHT: Well, again, for myself, I have asked 
parties that I'd like five working days prior to a meeting for 
quiet time for me for the cases that I'm involved with. 

But I think one of the things that ought to be 
pointed out that would help this problem, the more that 
Commissioners are involved with a case up front, and more 
communications there is with a Commissioner, with the ALJ, I 
think the less the pressure is to do things off center from 
where an ALJ may be going on a particular case. 

So again, it comes back to communication again. And 
I just hope that whatever legislation does come out, that it is 
thought through, that Commissioners ' hands are not tied 
unnecessarily . 

SENATOR ROSENTHAL: Finally, on this particular area, 
I was concerned about the final decision that the Commissioners 
made. You're responsible for making that decision, and I don't 
have a problem with that. 

The problem I have is that there ' s an ALJ who takes 
testimony on a particular subject matter. You can accept or not 
accept that decision and make your own, as far as I'm concerned. 
However, if you decide to make an alternative decision, not 



27 

based upon the facts as the ALJ saw it, then it seems to me 
there ought to be some period of time for some public disclosure 
of that alternative decision. 

In the case I was talking about, for example, the ALJ 
had made a certain decision. The Commissioners, for some reason 
or other, decided they didn't like it, went to an alternative 
decision, and that's okay, but then the Commission voted upon it 
the next day, before there was any notice to anybody that there 
was an alternative decision. 

And so, it seems to me that, at least some period of 
time, and I'm not prepared to say what that is -- maybe a week, 
maybe two weeks, maybe 30 days — so that if in fact there's 
going to be a decision not based upon the AL J ' s taking 
testimony, do you have comment on that? 

MR. KNIGHT: Well, I myself, I have to be careful 
here, because I think there's no question that there should be 
sunshine on alternatives . 

But again, it gets down to the issue, from my 
personal point of view, is how that is going to be instituted. 
Because if there are — at what point is there a substantive 
change in that a ruling has to go before the public? And 
secondly, on how many days do we have to wait for that decision? 
I think those are two very key variables that have to be taken 
into consideration before, I guess, I would agree to whatever 
proposition is on the — personally would agree to the 
proposition put on the table, because you do run the risk of, 
again, delaying procedures. 

And I have learned through this past six months that 



28 

in some cases, there are strategies from parties in order to 
delay decisions coming out. 

So, I guess in spirit, I would accept that there 
needs to be a sunshine on alternate decisions, but depending 
upon how, again, inflexible that rule is, we have to concentrate 
on it. 

SENATOR ROSENTHAL: On another subject, recently you 
attended two meetings of Commissioners which were essentially 
secret meetings. No notice, no agenda, no public allowed. And 
the Attorney General's Office said that these meetings should 
have been open to the public. Told the Commissioners that. 

Given the controversy surrounding the Commission's 
conducting business in private, what are your beliefs about 
public access and open meetings? 

MR. KNIGHT: Let me preface my remarks by saying that 
unfortunately, the California Public Utilities Commission has 
got itself into a position that, what is being touted in the 
newspapers that there are all kinds of secret meetings going on, 
and that is -- at least in my six months, that is certainly not 
the case. 

In this particular instance, the issue came up. We 
were under tremendous pressure, not only because of the case 
that you earlier referenced on how a decision came to a 
conclusion, but additionally, with the changes going on in the 
industries, myself and my fellow colleagues recognized there are 
some internal changes that have to take place. Talking about 
those kinds of internal changes, one has to deal with people's 
careers, their livelihoods, what their jobs are, and it gets 



29 

down to some very specific instances. 

The Bagley-Keene Act, which you're referring to in 
terms of allowing public access to all Commission proceedings, 
the interpretation that four of the Commissioners, and I being 
one of them, came to was that the meeting that you referenced, 
the agenda was tightly controlled, in that we were going to talk 
about the internal changes, and the shifting around of 
personnel, and the shifting around of budgetary dollars and 
resources. And we felt that that was a sensitive enough issue 
that the Bagley-Keene Act allowed us to act under that legally. 

We took two precautions . At the time we had the 
meeting, and you say there were two, and that's correct, we 
penned a letter to the Attorney General's Office, telling him 
that that was our interpretation of the Bagley-Keene Act. So, 
we acted, I think, in good faith, that we noticed the Attorney 
General's Office about that meeting and about what the agenda 
was going to entail. 

Additionally, and I made the recommendation and my 
other colleagues agreed, we decided to tape the meeting. So, I 
took my little tape recorder, and during the course of both 
meetings, we recorded it, and the transcripts are being prepared 
as we speak now. So that the idea being, in case there was -- 
there were other people, or the majority of people, that did not 
agree with our interpretation of Bagley-Keene, that we would 
have a record that we could probably stand next to and say that 
was the intent of the meetings, and that was the -- we were 
trying to attempt to make the necessary changes internally in 
good faith, and that there were no meetings that had to do with 



30 

any adjudicatory cases, or what have you. 

SENATOR ROSENTHAL: Well, I think that when that 
record is available, we'll then ask the Attorney General whether 
or not the subject matter was subject to participation by the 
public . 

You've already touched upon a couple of other things 
that I'm going to skip. 

Finally, describe your views on the role of 
government in regard to the so-called information super highway. 

MR. KNIGHT: One of the most exciting parts of 
working at the Commission is that we are able to participate in 
this much, to my thinking, over-used phrase: information super 
highway. And we are — have the opportunity to create the 
framework with which, to my thinking, telecommunications can be 
a world class industry here in California. 

The role of government, I think in this case, 
challenges the California Public Utilities Commission, which 
historically has been one of command and control, where we tell 
our utilities exactly what to do. We set very strict rules of 
entry for people to be able to participate in this business. 
And now that is being changed, because there are more 
competitors on the horizon, that the marketplace will end up 
playing the role that the Commission, as surrogate, has 
historically played. 

To my way of thinking, our goal is to set the playing 
field to be level for all participants to be able to come in, 
and for us to be on the sidelines to make sure that California 
consumers are not harmed in terms of potential consumer fraud, 



31 

or services that don't deliver the benefits that Calif ornians 
are entitled to, and that we allow these companies to 
participate in a growing industry that, I think, is going to 
benefit California in the long run. 

SENATOR ROSENTHAL: It could lead to many new 
industries. Of course, we're going to have to figure out how to 
pay for it. We're also going to have to figure out how to keep 
the consumers, the public, informed about what's taking place. 

There's so many changes taking place daily in 
telecommunications that the average person out there has no way 
of keeping up with it. So, we need some education, perhaps, 
from the Commission, or legislation, to help them understand 
what's happening, and figure out how to pay for it. 

Thank you very much. 

SENATOR AYALA: Mr. Chairman. 

CHAIRMAN LOCKYER: Senator Ayala. 

SENATOR AYALA: I wish to follow up on Senator 
Rosenthal's questions in terms of the PUC. 

Do they come under the Brown Act? 

MR. KNIGHT: Bagley-Keene . I think the Brown Act is 
for local governments, and the Bagley-Keene, I guess, is for 
state . 

SENATOR AYALA: Not for state-level organizations or 
committees? 

MR. KNIGHT: I don't think so. I'm not a lawyer, but 
I think it's the Bagley-Keene. 

SENATOR AYALA: It's local governments only. 

Thank you . 



32 

CHAIRMAN LOCKYER: Senator Rosenthal had asked about 
the role of the PUC with respect to the information super 
highway, especially as it relates to educational information. 

Is there a similar explosion of activity in other 
technological areas, like, let's say, wireless communications? 

MR. KNIGHT: Yes. We have just instituted Oil on 
wireless because that is an area that is obviously exploding, 
and there's a lot of new companies looking on, not just cellular 
companies, but all the way to satellite kinds of technologies. 

And we have a proceeding that is about to begin very 
soon, I guess in the next few weeks or so, where we're going to 
investigate those kinds of areas of concern for the PUC and 
opportunities for California. We're taking commentary from the 
public on that technology. 

CHAIRMAN LOCKYER: Do you have a feeling about how 
the role of the PUC might change with respect to it? 

MR. KNIGHT: Well, there's no question that I think 
that we'll be an umbrella over almost all the utilities that we 
manage, including, I think, whatever comes out of the Oil 
process for wireless. 

I think you will find that the role of the PUC, and 
the role that I think I'm committed to, as I said in my earlier 
remarks, that you will find the Commission far more committed to 
issues of consumer safety, consumer protection, and I dare say 
even issues of security, particularly when you're dealing with 
telecommunications. So, we will be more, I think, in a consumer 
protection mode than we have in the past. 

That's not to say that there won't be rules and 



33 

regulations for us to manage that which is newly defined as 
monopoly kinds of businesses. There we would still maintain our 
historical role as managing the utilities. 

CHAIRMAN LOCKYER: There are proposals to change the 
jurisdiction of the Energy Commission and the PUC . I guess some 
of the ideas contemplate shifting functions from PUC to Energy, 
from Energy to PUC, or eliminating either. 

Have you had an opportunity to review those ideas, 
and can you share any thought about how the PUC, or how you 
would view, working through that discussion? 

MR. KNIGHT: Well actually, we're in the process of 
going through that review right now. We have a full panel 
hearing with some past Commissioners that would present their 
ideas and how we best should manage our agency and the role it 
should play. 

I am not as familiar with some of the duties that the 
CEC had. I do recognize that some of those duties may come to 
the Commission. 

I'm withholding judgment until I get all the 
information from some of these full panel hearings we have 
coming up this week and, I think, next week. 

CHAIRMAN LOCKYER: What's the toughest decision that 
you've had to render so far as a Commissioner? 

MR. KNIGHT: The toughest decision. Actually, that's 
a tough question. 

Every day there seems to be one, but if I had to 
focus on two, I guess, to cast my vote to turn around the IRD 
process that Senator Rosenthal was alluding to. Because I did 



34 

not participate in the decision, I thought that the mere 
inference that there was any impropriety going on meant that I 
think we should have rescinded the decision, and to open up the 
information to the public about what had happened and what had 
not happened. 

I had had a lot of advice coming in as a newcomer 
that it's always easier to try to make the safe decisions. But 
I figured as long as I'm sitting in the chair, I'm going to -- 
if I can get the information and educate myself quickly enough, 
I would make the call. That was a tough one. 

The other one was the Pac Tel spin-off. Again, it 
was a very contentious, hotly debated decision. I had time 
enough to hear all parties, and I think I made personally the 
right decision based on the information that was presented to 
me. And I guess that would probably be the second toughest. 

SENATOR ROSENTHAL: Mr. Chairman, in support of the 
Commission, when it was brought to the Commissioners' attention 
on the IRD, they did stop that decision from proceeding to take 
another look at it. So, I just want to indicate that it didn't 
just go through anyway. 

MR. KNIGHT: Thank you, Senator. 

CHAIRMAN LOCKYER: Are there other questions from 
Members? 

Is there anyone present who would like to indicate 
their support for the nomination or opposition? 

MR. DOYLE: Chairman Lockyer, Members of the Rules 
Committee, my name is Don Doyle. I am currently President of 
the Junior Achievement Organization for the six Bay Area 



35 

counties, and before that was with the Chamber of Commerce of 
San Francisco. 

A few years ago, we sought out Jessie Knight to come 
with us, and our organization is made up, as he said, in excess 
of 2,000 members; 80 percent of those are small business. And 
we needed someone like Jessie, with his talents, with his 
background, to help us cultivate that area of our membership. 

You all have received letters from me, and you've 
heard his testimony, and I have nothing to add to that, except 
to ask your consideration for his job as a Commissioner of the - 
California Public Utilities Commission. 

CHAIRMAN LOCKYER: Thank you. 

Any last questions? 

Was there anyone else that would wish to comment? 

What's the pleasure of the Committee? 

SENATOR CRAVEN: Move. 

CHAIRMAN LOCKYER: We have a motion by Senator Craven 
to recommend confirmation. 

Call the roll, please. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Lockyer. 



36 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Five to zero. 

CHAIRMAN LOCKYER: Thank you, Mr. Knight. 

MR. KNIGHT: Thank you, Senator. Thank you, Members. 

CHAIRMAN LOCKYER: Best wishes and good luck. 

For purposes of our stenographer, we would like to 
take a five-minute break. 

[Thereupon a brief recess was taken. ] 

CHAIRMAN LOCKYER: I guess the next item is Mr. 
Johnson. Give us a minute to locate a couple of folks. Well, I 
guess they're expected momentarily. 

So, Mr. Johnson, if you'd like to begin, perhaps you 
have some general comments you'd like to make regarding the 
appointment and your qualifications. 

MR. JOHNSON: Yes, may I have five minutes, sir? 

CHAIRMAN LOCKYER: Sure. 

MR. JOHNSON: Mr. President of the Senate, honorable 
Senators, I, Perry 0. Johnson, respectfully submit that I am 
abundantly qualified to fulfill the duties of one of the seven 
Commissioners of the Workers' Compensation Appeals Board. 

My qualifications flow first from a balanced 
professional background as a lawyer having experience in the 
area of litigating industrial injuries. Further, I submit that 
I have lived life experiences which have instilled in me 
particular sensitivities which few Commissioners of the WCAB 
have brought to the Board. 

But first, my professional background has had me 
represent hundreds of injured workers in a system I'd submit to 



37 



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7 
X 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
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be somewhat purer than the California workers ' compensation 
system insofar as the fair awarding of benefits to persons 
injured or afflicted with illnesses related to employment. 

I also have had ample experience in defending 
employers in proceedings before the Workers ' Compensation 
Appeals Board in the State of California. My work as a 
litigator has given me a practical appreciation of the rules and 
legal concepts in this complex, sometimes contradictory area of 
the law. 

Specifically in representing the injured workers, the 
United States Army afforded me the opportunity in 19 7 7 to come 
to California while on active duty as an Army lawyer; that is, a 
Captain in the Judge Advocate General's Corps at the Presidio of 
San Francisco. I served some 22 months — May of 1978 through 
March of '80 — at the Physical Evaluation Board. That Board is 
charged with the responsibility to effect administrative 
hearings for soldiers faced with medical discharges due to 
injuries and illnesses arising in the line of duty. In holding 
the title of Counsel with the Physical Evaluation Board, I 
represented claimant soldiers in more than 300 formal 
evidentiary hearings. 

I possess vivid recollections of men and women in 
physical and mental pain. I can never forget the anguish that I 
took on in representing the interests of workers who happened to 
have worn the uniform of the United States Army, who looked 
towards the uncertainty of the future in coping with severed 
limbs, significant orthopedic disabilities, and diagnosed 
psychiatric illnesses. 



38 

In this state, as a member of the Bar, I've been a 
staff attorney for the State Compensation Insurance Fund for the 
period 1980 through April of '93. That experience gave me the 
opportunity to represent the interest of many employers in 
proceedings at district offices of the WCAB, primarily in San 
Francisco and Stockton. Thus, I have experienced first-hand the 
frustration and turmoil of employers, mostly small concerns, 
confused by a system which results in significant insurance 
premiums, yet to such employers, there's a perception that the 
system lacks the means for their fair participation. 

My qualifications further arise out of a sound 
educational experience in the parochial schools of Chicago, 
Illinois and New York City, with a public high school education 
in the Commonwealth of Virginia, a college education in a 
wonderful, historic Black college, the Hampton Institute in the 
State of Virginia, and a law school education at the Catholic 
University of America. 

That education enabled me to sit for the Virginia 
State Bar in 1976, and the California Bar in 1981, and 
successfully pass the exams in one sitting. 

Lastly, as an immigrant to the United States, having 
been naturalized at age 21, I possess a sincere belief in the 
principles of this great country of ours. California and 
America I truly love, and I've never given up on the ideals of 
the quest for justice and that there are rewards for hard work, 
and such can be attained in this great country. 

Based upon my sincere belief in America, I truly 
believe that the pain of learning of the -- I would submit 



39 

respectfully, the ill-founded opposition to my confirmation, 
that I will -- I would ask to be fairly evaluated by the 
honorable Senators today based upon my total record. 

I come here with the hope that the art of politics, 
and the somewhat character assassination visited upon me should 
not prevail, but that I should be confirmed as a Commissioner of 
the Workers ■ Compensation Appeals Board to serve out the balance 
of the term of office bestowed upon me by the honorable Pete 
Wilson, Governor of the State of California. 

Thank you, sir. 

CHAIRMAN LOCKYER: So, it's your view that Governor 
Wilson, there's no political element to his appointment? 

MR. JOHNSON: No, sir. I wasn't advancing that, not 
at all. 

CHAIRMAN LOCKYER: Let me just ask if there are 
questions from Members of the panel, first of all? 

Perhaps you could just start by informing us if there 
have yet been cases that have reached you that reflect the 
changes in the law that were done — 

MR. JOHNSON: The 1993 legislation, no, sir. Of 
course, that affects injuries occurring on or after January 1 of 
'94, so certainly cases have not reached the Board at this time. 

CHAIRMAN LOCKYER: No opportunity to evaluate that 
body of law yet to see what might have worked or not worked? 

MR. JOHNSON: No, Senator. I'm pretty sure it'll be 
some time before that's possible, just in terms of the course of 
litigation and the — 

CHAIRMAN LOCKYER: Do you have any thoughts about 



40 

what we ought to call the judges: referees, or hearing 
officers, or whatever? 

MR. JOHNSON: Well, I have expressed my views to my 
fellow Commissioners. I certainly looked at the legislation, 
and the legislation at this time has the designation of Workers ' 
Compensation Referee. However, these are hard-working and 
sincere public servants who have labored under the title of 
Workers' Compensation Judge. 

The Board rules that were promulgated for operation 
for January 1 of this year retain the phrase "Workers ' 
Compensation Judge." However, I have related to my fellow 
Commissioners that we should look at what the Legislature has 
handed us and that the title that should be used is "Workers ' 
Compensation Referee," and hence, through my remarks, I'll make 
reference to the term "Workers' Compensation Referee." 

CHAIRMAN LOCKYER: Do you have any thought about what 
the appropriate characterization should be? 

MR. JOHNSON: Sir, I think that's a function of the 
Legislature, in that the law of workers' compensation is wholly 
statutory. 

CHAIRMAN LOCKYER: Does any particular decision or 
type of decision come to mind as the most troublesome matters 
that you struggle with? 

MR. JOHNSON: Oh, yes, there are several; several 
very difficult cases, and practically all the cases are very 
tough. 

I've been informed that the Board receives some three 
percent of the cases that are litigated in the state. The 



41 

questions that come are very difficult. The constraints of time 
certainly bar us from developing the opinions in ways that we'd 
really like, but I think the staff of the Board has done some 
marvelous, marvelous work. 

There are cases that have certainly been cited in the 
letters that have been submitted in opposition to me that I'd 
like to certainly touch upon. One case that continuously comes 
up is the Sanchez vs. Aetna Insurance , which I think has been 
mistakenly characterized as an attempt of the Board to introduce 
fault into the system. That particular case dealt with, as we 
looked at it, the range of compensable consequences. The case 
turned on a worker who suffered a crushing injury to the foot. 
During the course of treatment, he had an infection to the bone, 
called osteomyelitis, a very serious condition. Also during the 
period of treatment, he was diagnosed as having diabetes. 

Several months of extensive treatment were afforded 
the injured worker. Recovery seemed to have been apparent, in 
that the worker returned to work and was working for some four 
months . 

On a weekend, following what appeared to have been a 
full recovery, in a desert community of this state, the 
gentleman, at an amusement park, a water park, walked upon very 
hot cement. The cement was so hot as to cause blistering on the 
feet the next day. Of course, treatment was procured, and 
unfortunately, osteomyelitis was detected with this particular 
injured worker. 

The Board was troubled by the case, in that upon 
receipt, it was obvious that both the parties had intentions of 



42 

seeing the matter proceed through the Court of Appeals . As 
you're well aware, a Petition for Reconsideration to the Board 
is a condition precedent before judicial review can be affected. 

The Commissioners on the particular panel struggled 
with the case for some time. The Workers' Compensation Judge 
extended the provision of medical treatment -- the Workers ' 
Compensation Referee, rather. Did not award temporary- 
disability indemnity. His theory of disallowing TDI was 
unacceptable to the Board, and the Court of Appeals, when they 
finally looked at the case, found the judge's position 
untenable. 

Looking at the facts of the case, the Commission, the 
majority, of which I concurred, felt that the injured worker, 
having knowledge of his serious past injury, in light of his 
diabetic condition, acted in such a rash fashion as to border on 
gross negligence -- or, not gross negligence, but negligence. 

The Court of Appeals did not feel that the panel 
properly handled the case and deemed that we had erred. The 
case was reported in the "California Compensation Reporter, " the 
comments in italics at the end of the reported case. The 
editor's notes point out that this area of workers' compensation 
law is difficult. 

"The case sheds a valuable light on the 

range of compensable consequences of an 

industrial injury. In attempting to raise 

the dicta in Beatty ..." 
And that was a case that the panel discovered, Beatty ; 

"... to raise the dicta in Beatty to the 



43 

level of the rule of law, the panel chose 
a record that was inadequate for applying 
such a rule. If the opinion remains 
unpublished, the panel may again seek to 
establish that under Beatty , rash conduct 
breaks the chain of causation between 
original injury and a subsequent injury or 
exacerbation. " 

It's interesting to note that this very area of the 
law, the range of compensable consequences in workers' 
compensation, was written 24 years ago, 21 Hastings Law Review, 
page 609, by the esteemed Professor Arthur Larson, who many 
would deem to be one of the great thinkers and scholars in 
workers' compensation. Professor Larson has certainly 
recognized that there are those acts which can lead to a denial 
of benefits for nonindustrial second injuries that do not 
directly arise out of employment activities. And rather than -- 
that ' s one of the more troublesome cases . 

CHAIRMAN LOCKYER: Are there areas of the law where 
you see a case come by that you wish the law were different, 
that it would either confer or deny benefits? 

MR. JOHNSON: Before the last phrase I had a 
response, but one of the most troublesome areas that we, sitting 
as a Commissioner, are faced with arise out of Labor Code 
Section 5505.5, which is essentially the battle between 
insurance companies on matters of contribution. There ' re too 
many of those cases that we see, and we always wonder why the 
insurers can't settle and resolve their disagreements with 



44 

regard to who is going to pick up the bill. 5505 is convoluted, 
and some of the cases essentially go off in different 
directions, but the Coltharp and then there's the Western 
Growers case, which essentially go in different directions. 

CHAIRMAN LOCKYER: That's as to which carrier is 
liable — 

MR. JOHNSON: Yes. 

CHAIRMAN LOCKYER: — for what portion of the claim. 

Do you ever have a feeling like, this is someone 
who's been denied benefits that should get them, or the 
converse, someone who's getting benefits that shouldn't, but the 
law necessitates that act on your part? Have you bumped into 
that feeling when you review cases ever? 

MR. JOHNSON: Well, one area of the law that's very 
difficult is, of course, those statutes that are found in the 
area of 3212, and of course, there's — that's the area where 
essentially law enforcement, firefighters, public servants, are 
given certain presumptions of compensability. In fact, a case 
that was just handed down reversed both the Workers ' 
Compensation Judge and the Board. The Court of Appeals seems to 
have taken a keen interest in this particular regard. 

I don't seem to have that with me. 

CHAIRMAN LOCKYER: Just as you recall the general 
law, not in a specific case, the Board ruled -- 

MR. JOHNSON: It essentially sprang out of a 
firefighter who had contracted cancer. He had shown that during 
the course of his employment, he was exposed to certain 
carcinogens . 



45 

The Board felt that based upon 3212, that the 
benefits should flow. The Court of Appeals felt that there 
wasn't a linkage, if you will, between the exposure some years 
back and the development of the carcinogens [sic]. We're 
somewhat still baffled by how the Court went in that direction. 

Further legislation in this area might be 
appropriate. 

CHAIRMAN LOCKYER: I think that might be the San 
Leandro firefighter case. 

MR. JOHNSON: It was just handed down on about March 
25th, relatively recent. 

CHAIRMAN LOCKYER: I'm going back a couple of years 
to the one I'm thinking about, which was the causality debate 
over when the cancerous condition had metastasized. I think 
that predates your service on the panel . 

Other questions from Committee Members? Shall we 
take some testimony? 

SENATOR CRAVEN: I'd like to hear anybody. 

CHAIRMAN LOCKYER: Those that would wish to, perhaps, 
say something in support of the appointment? 

MR. WASHINGTON: Mr. Chairman, Members, Willie 
Washington with the California Manufacturers Association. 

We support the appointment. In a case similar to 
this, where we don't have the direct contact ourselves, we do 
have an interest in the Commissioners and what they do, I, in 
turn, contacted many of the members and the attorneys that 
represent them to try to get an idea of the work that the 
Commissioner had done thus far. 



46 

Actually, the report that I got, and in reading a 
little bit of background about him, he certainly seems to be 
very well qualified for the position. Some of the things that 
we always concern ourselves with in positions that are appointed 
positions is the qualification of those people being appointed, 
so he certainly seems to have all of the background. 

And when I looked into it a little bit further, some 
of the areas in which he has practiced, sometimes it's difficult 
to get people to leave the practice to go and sit on a board. 
So, actually, I was very, very pleased to see that the 
individual had also had first-hand knowledge and practice in the 
field prior to being appointed to this position. 

There was some question, and I became aware of the 
fact that there was some opposition to the confirmation, and so 
I was motivated to look a little further to try to find out what 
the problems were. Now, I didn't go into the specifics, try to 
learn about the individual cases and all the other items. I was 
basically more concerned about the overall performance of 
Commissioner Johnson. 

In looking at his performance, I was actually very, 
very surprised by the fact of the activity on his part, the fact 
that he'd been a very, very active Commissioner, and that he's 
participated in about 1200 cases. In asking about some of the 
other Commissioners and the level of participation, I found out 
that that's really quite high. It certainly shows a high level 
of interest and a high level of commitment to being a member of 
the Commission. 

Also, I asked about the members, what their 



47 

experience had been with his decisions, and the information that 
I got was that he was rated very high, especially in light of 
the fact that he ' s had so many opportunities to be looked at and 
to be judged as to the type of decisions and so forth that he 
had made. I was also told that he has certainly demonstrated a 
great deal of commitment to this position. No one that I talked 
with had indicated that his opinions were either intemperate or 
improper. 

So, I come here today to say that we support 
Commissioner Johnson, and we would certainly urge your 
recommendation for confirmation. 

CHAIRMAN LOCKYER: There are other letters of support 
in our file that I'll make note of for the record. 

Is there anyone else present who wishes to comment on 
the positive side? 

If not, we'll ask for any opposition comments to be 
made . 

MS. BROWN: Good afternoon, Senator Lockyer, Members. 

Melissa Brown for the California Applicants ' 
Attorneys Association. 

Our Association has filed a letter of strong 
opposition to the confirmation of Commissioner Johnson. 

We had asked the Rules Committee to provide cases, or 
asked the WCAB to provide some cases for our review because we 
were concerned with reports from our members as to the decisions 
that were coming out of the Appeals Board authored by 
Commissioner Johnson, or decisions in which Commissioner Johnson 
had filed a dissent. 



48 

We are mindful that the sitting Commissioners on the 
WCAB are the Governor's appointees. We are mindful that the 
Governor certainly has the right to appoint those whom he feels 
reflect a particular political bias, and our organization 
traditionally does not step forward to oppose Commissioners' 
confirmations simply because they are made by a particular 
Governor of a particular party. 

However, the reports were coming in from our members 
that Commissioner Johnson's opinions seemed to be out of line, 
far to the right, and indicated bias against workers, and a 
misstatement of the law, and a misunderstanding of his role as 
an appellate officer. And indeed, those concerns were confirmed 
when we reviewed cases that our members had provided as well as 
cases that were provided by the WCAB. 

Our letter of March 14th, 1994, I think, sets forth 
with specificity our concerns. We were saddened to see that in 
several decisions in which Commissioner Johnson filed a dissent, 
in all of those cases but one, his dissent would take away the 
benefits to the worker that the trial judge had awarded and that 
the two other Commissioners had felt were appropriate. 

CHAIRMAN LOCKYER: Let me interrupt, if I may, just 
to ask Mr. Johnson to respond to this point. 

Apparently there are 36 written opinions in which an 
employer appealed a decision, and the panel decided against the 
defendant employer. That is, 36 of them in which you were on 
the panel. So, there were two voting opposite you, that you 
were the dissent in 35 of the 36 cases, always on the employer's 
side of the issue in 35 of the 36. 



49 

Could you comment on that general pattern? 

MR. JOHNSON: Well, sir, I certainly during the 
course of performing my duties as a Commissioner have not kept 
any tally, and I certainly don't make decisions based upon any 
predisposition . 

One of the most difficult things of being a judge 
certainly is to throw off the mantle of being an advocate, being 
a lawyer. It is a difficult process indeed. 

I look at every case on its own merits. I've 
exercised the prerogative of a Commissioner, namely to voice 
disagreement. I've looked at -- just as a general comment, I 
would say that I, in looking at the cases, I would adhere to the 
rules of substantial -- substantial evidence, look at the entire 
record, recognize that the Board, Workers' Compensation Appeals 
Board, make its own findings on credibility, can certainly re- 
weigh the facts. 

Based upon my experience, my thorough examination of 
the files, I felt bound to take the positions that I did, not 
based upon any notion of who's going to win or who's going to 
lose. The evidence I analyzed, and I came up with the results 
that I did. 

CHAIRMAN LOCKYER: Senator Craven. 

SENATOR CRAVEN: If I may asked the lady a question, 
is there any directional or geographic boundaries to the law? 

MS. BROWN: I'm not sure what I — if I understand 
your term of geographic boundaries, Senator; however, certainly 
a Commissioner is bound by the statutory law, the case law, and 
the California Constitution. 



50 

SENATOR CRAVEN: Yes, in other words, the law 
prescribes the boundaries; doesn't it? 

MS. BROWN: Correct. 

SENATOR CRAVEN: Now, when it does that, does it not 
also afford an option for those to interpret the law? 

MS. BROWN: The options for an appellate judge are 
prescribed, Senator, and the proper function of the appellate 
judge is not to re-weigh the evidence, as we have seen in many 
instances in Commissioner Johnson's case, but the Commissioner 
is required to overturn the trier of fact only if there is 
considerable evidence of a substantial nature to compel that. 

And the Supreme Court in the Garza case has said that 
it is only in rare occasions where the appellate judge -- our 
system of workers ' compensation, the Commissioner -- should put 
forth his own findings, substitute his or her own findings for 
that of the trial judge and re-weigh the evidence. 

So in that respect, Senator, I don't believe that a 
Commissioner has unbridled options to re-weigh and interpret the 
law. Rather, they are proscribed by the -- 

SENATOR CRAVEN: Even if the law offers no 
proscription? 

MS. BROWN: The law, sir, does offer proscriptions. 
The law requires that the law be liberally construed. The 
Supreme Court, again, has set forth the requirements of the 
Commissioner in interpreting the law and the facts. 

SENATOR CRAVEN: Are you an attorney? 

MS. BROWN: Yes, sir. 

SENATOR CRAVEN: In your experience as an attorney 



51 

and, perhaps, in representing clients, or being in the milieu of 
the legal profession, haven't you seen judges, some at a brisk 
step, some very laggard, and some in between as it relates to 
the interpretation? Do they all, you know, act just like that 
on key? 

MS. BROWN: Oh, no, of course not. 

SENATOR CRAVEN: If they do, you tell me where that 
happens, because I'm considerably older than you, and I've never 
seen it happen. 

MS. BROWN: No, of course not. 

SENATOR CRAVEN: Well then, why are we getting so 
terribly excited about a man who, in the words of a famous 
American once said, we need a standard to which we must repair, 
and he has found that standard in his own mind and within the 
law. And he's being criticized for having done so. 

MS. BROWN: Senator, he's been criticized by our 
Association for misperceiving his role as a judge, or 
misapplying the law, and evidencing a bias against a certain 
segment of the system, and that's the basis of our criticism, 
sir. 

SENATOR CRAVEN: Well, would I be just untoward if I 
were to say, when you say that he was far too right, is that 
spelled out which is one of the options that you have to indict 
him within your own mind? 

MS. BROWN: Sir, each individual and each judge, 
obviously, brings their own experience and background, political 
and other persuasions, to the bench. 

However, in this instance, we have seen case after 



52 

■ 

case where the decisions are out of line with what is already a 
conservative board. And those decisions, which would time after 
time substitute his own decisions for the trial judge, misapply 
the law, misapply the facts, not look at the entire record, 
those types of qualities and behaviors are not appropriate for a 
judge. 

SENATOR CRAVEN: Well, if he, to use your word, 
misapplies, is there no agency, or person or persons who can 
control that? 

MS. BROWN: Parties who are aggrieved can file their 
appeal with the Court of Appeals, sir, and the segment of the 
population that I represent has limited resources to do that. 

SENATOR CRAVEN: You represent injured persons. 

MS. BROWN: I represent working people of 
California. 

SENATOR CRAVEN: Well, I understand that, and I 
understand the feeling that you must have. 

I would not — I am not qualified -- but I would not 
want to sit in a position of a judge, hearing testimony from or 
about the people that you represent, because it's a traumatic 
experience, at least it would be to me. And I do not have, I 
suppose, the strength or the courage to find against them, even 
though I may be pushing their case a little too much to make 
them win. 

Do you understand what I'm saying? That would be 
difficult for me. 

It was obviously not difficult for him. He doesn't 
care where they came from, who they represent, or who represents 



53 

them. He says what he thinks. 

And I find it very, very difficult, in fact, I find 
it impossible, to be critical of him for that. That, to me, is 
no grievous sin. 

Enough said. What happened to the Chairman? He 
leaped out. I'm it? 

Well, if that be the case, would you like to say 
something else? 

MS. BROWN: I can continue. One of the things I've 
learned in over ten years as a lawyer is, when a question 
doesn't call for an answer, then shut up. 

SENATOR CRAVEN: What you've said has been very, very 
informative to me . I enjoyed your testimony. 

MS. BROWN: Thank you. 

Again, our letter of March 14th points out several 
other areas where Commissioner Johnson has demonstrated that he 
is results oriented. He spoke of one case, the Sanchez case, 
where he apparently takes issue with our characterization of 
that case as introducing fault into the system. 

There are several other cases. The Thompson case, 
where he would have — he reversed the trial judge, and the 
deceased worker's family then took nothing as a result of this 
case, and basically would have had the injured worker 
responsible for his own death because he failed to take high 
blood pressure medication. 

And those kinds of issues certainly have no place in 
a decision of a Workers' Compensation Commissioner. If the 
defendants wanted to argue negligence on the part of fault on 



54 

the part of the worker, they have a remedy that's called a claim 
for serious and woeful misconduct. In none of these cases were 
those claims ever filed; rather, Commissioner Johnson introduced 
those issues on his own. 

SENATOR CRAVEN: Tell me, I'm very unfamiliar with 
your processes in this particular area. How may people sit in 
judgment when you bring a client before them? 

MS. BROWN: Well, on the initial trail level, there 
is one judge. 

SENATOR CRAVEN: That's the first one. 

MS. BROWN: Right, and then the Appeals Board has 
seven Commissioners. 

SENATOR CRAVEN: Seven? 

MS. BROWN: Yes, sir. 

SENATOR CRAVEN: That's what I was trying to get to. 

MS. BROWN: Right. 

And I have a colleague here who has worked with the 
Appeals Board. If you have more questions on the workings of 
the Appeals Board, he is available to answer those questions. 

SENATOR CRAVEN: Let me ask you, and this might be 
difficult for you to answer, but how many times has the action 
or the opinion of Mr. Johnson affected in a negative sense what 
you consider to be the best interest of the client? 

MS. BROWN: The injured worker client. 

SENATOR CRAVEN: Injured worker client. 

MS. BROWN: Well, we reviewed approximately 120 
decisions, and I can do a rough tally, if you'd like. I didn't 
tally all of them up. 



55 

SENATOR CRAVEN: If you just have the figures in your 
mind, I'll take your word. 

MS. BROWN: In my recollection of reviewing those, in 
well over two-thirds of those. 

SENATOR CRAVEN: Two-thirds? 

MS. BROWN: Well over two-thirds, sir. 

SENATOR CRAVEN: Now, does that mean the benefits 
which you sought for your injured client were then denied? 

MS. BROWN: In some of those cases, no. You heard 
the reference to 36 cases in which the majority denied the 
defendant's appeal, which denied -- which uphold the decision of 
the trial judge. In all but one of those cases, Commissioner 
Johnson filed a dissent, which, had it been the majority, it 
would have taken away the benefits. 

So, in 35 cases we reviewed, the worker did prevail 
in spite of Mr. Johnson's dissent and misapplication of the law. 

SENATOR CRAVEN: So in other words, his — what I'll 
call for the want of a better word -- negativist attitude has 
not always been a crushing blow to the client, the injured 
client . 

MS. BROWN: Not always. In many cases it has, 
though. 

SENATOR CRAVEN: Well, you know, you have been around 
here among us for years, I presume; have you? 

MS. BROWN: I've been a lawyer for ten — 

SENATOR CRAVEN: Well, that's a long time. 

You know, I have served here not as long as Senator 
Petris, not as long as Senator Beverly, but in that period of 



56 

time, I've taken to being a great admirer of certain of my 
colleagues, men and women both. 

But I find myself at times very much in opposition to 
what they say, but I don't really think that their opposition is 
so tremendous. I think it's very exciting to listen to because 
it makes me think. 

I think that man over there is caught up in that same 
feeling. I think he wants to express himself as he feels it 
inside . 

And I really don't think he's trying to really go out 
of his way to, you know, put the screws to the clients. 

MS. BROWN: Well, I would differ in that assessment. 
The difference in a philosophical debate, or an intellectual 
debate, and a workers' compensation case is, these are people's 
only chance. It is their case; it is their life; it is their 
family's lives. So, it's a very, very serious matter that we're 
dealing with. . 

SENATOR CRAVEN: I understand, and I appreciate your 
comments. Thank you very much. 

MS. BROWN: Thank you. 

SENATOR CRAVEN: Is there anyone else who would like 
to speak in opposition? Yes, come up, state your name, please. 

MR. WILLIAMS: Senator Craven, my name is Barry 
Williams. I am a practicing attorney in the field of workers' 
compensation. I have been in the field for 26 years. I 
presently practice with the firm of Boxer, Elkind and Gerson in 
Oakland. 

For three of the years, I was a Workers' Compensation 



57 

Judge, two years of which I served on the staff of the Workers' 
Compensation Appeals Board as a staff judge and assistant 
secretary, and from time to time, an acting Deputy Commissioner 
sitting on the same panels that Commissioner Johnson sits on, 
deciding cases. There are not very many of them, but that would 
occur when there was an absence of enough Commissioners and 
deputies to sit on the panels. 

My main job was serving as a staff judge, supervising 
six attorneys that prepared the opinions for the Commissioners. 
And I might add that rarely do Commissioners write their own 
opinions then and, I believe, now, although Commissioner Johnson 
writes, I believe, many of his own opinions. 

I'm a past President of the California Applicants' 
Attorneys Association, am presently a member of the Board of 
Governors. I serve as the Chairperson and a member from time to 
time of the Amicus Curiae Committee of the Association. 

As indicated in my testimony presented here today, 
which I think has been made available to the Committee, and my 
letter of opposition to Commissioner Johnson, it was I who was 
assigned by the Board of Governors to collect and review 
decisions of Commissioner Johnson when we were -- when we 
learned, shortly after his confirmation, that decisions were 
coming out that seemed to be out of the mainstream. And by out 
of the mainstream, I don't just mean a conservative appointee 
deciding cases. 

I have related in my testimony, my written testimony, 
the history of how, in the '60s and -- later '60s and early 
'70s, Commissioners appointed by then-Governor Reagan took it 



58 

upon themselves, felt they had the power, to reverse the 
decision of the Workers' Compensation Judge or Referee, carte 
blanche, because of certain language in the Labor Code that 
seemed on the surface to give that power. 

However, in the late '60s and early '70s, the Supreme 
Court and the Court of Appeals did come down with several 
decisions which sharply restricted the power of the Appeals 
Board to substitute its own opinion for that of the Workers ' 
Compensation Judge or Referee. Decisions such as Garza 
determined that there had to be evidence of considerable 
substantiality in order to reverse the decision of the Workers ' 
Compensation Judge or Referee. The Board was required to state 
in detail the reasons for its decision after -- and show that it 
had given careful consideration to all of the facts, and detail 
its reasoned analysis and the substantial evidence or the 
evidence on which it relied. 

The Evans case, LeVesque also, determined that a 
decision to be supported by substantial evidence had to be 
substantial evidence on the record as a whole, and not just any 
evidence that would support the decision. 

Thus, the power of the Appeals Board to reverse is 
not unlimited. And I would to, just for a second, go back to 
the difference between the Public Utilities Commission and the 
Workers ' Compensation Appeals Board, because we heard some 
testimony about that earlier today. 

The Public Utilities Commission hearing officers or 
administrative law judges do report to the Public Utilities 
Commission, which is then free to make its decision. They do 



59 

not have the original power of decision as do Workers ' 
Compensation Judges or Referees. 

Thus, it is not just in the power of a Workers' 
Compensation Appeals Board Commissioner to reverse and assume 
that, as Commissioner Johnson has stated in one of the cases we 
reviewed, that he is the ultimate trier of fact and law. To be 
sure, the Appeals Board can reverse decisions of the Workers' 
Compensation Judge for proper reasons, both on the facts and the 
law, but it is not an unlimited power. 

And nowhere in the decisions that I reviewed of 
Commissioner Johnson -- and I reviewed a good many of the 126 
decisions that were presented in response to the Committee's 
inquiry or request to the Board -- did I see an acknowledgment 
of the power of the Commissioner, or what I see as the true 
power of the Commissioner under the case law -- in other words, 
I didn't see an analysis of the case law. 

The case that I cited earlier, the Boyd case, Boyd 
vs. Chevron Chemical , Commissioner Johnson did state that he was 
charged with the responsibility as the ultimate trier of fact 
and law, and I think that is a throw back to the late '60s and 
early '70s, when the Workers' Compensation Appeals Board, 
previously the Industrial Accident Commission, would take unto 
itself the almost unlimited power to do whatever it wanted to do 
in response to the record. 

I also believe, based on my review of the decisions, 
that Commissioner Johnson did misconstrue the law, misstated the 
law, imposed fault on to the system. The Sanchez case is not 
just a decision of the Board that we're critical of, with the 



60 

dissenting Commissioner Commissioner Gannon. The Court of 
Appeals really did take the Board to task for what they did in 
that case. You read that opinion, if one reads that opinion, 
one cannot escape the implication that the Court is really 
taking the Board to task. 

That is basically the substance of my testimony. I 
would certainly answer any questions that the Committee Members 
have based on my review of the decisions, or any other matters 
based on my practice with the Board and the Board's practice and 
procedure . 

As I indicated earlier, I am aware and familiar with 
the Board ' s internal practices and procedures . 

SENATOR CRAVEN: Have you not testified before us in 
times past? 

MR. WILLIAMS: I have. 

SENATOR CRAVEN: Yes, I recall. And when I saw you 
sitting up here, I thought, that man looks familiar to me. 

Let me ask the Members of the Committee, is there 
anyone who wishes to address a question to Mr. Williams? 
Senator Ayala? I mention him because he's the fellow that 
generally asks most of the questions, but you've evidently sold 
him; he's not saying anything. 

All right, thank you very much, Mr. Williams. We 
appreciate your testimony. 

Anyone else who wishes to speak? Mr. John Henning. 

MR. HENNING: Mr. Chair, Members of the Committee, 
Jack Henning, California Labor Federation. 

We are in opposition to the appointment. With the 



61 

whole workers ' compensation system as a shelter and a sanctuary 
for injured workers, what chance does a worker have against 
Chevron? Against any corporation? So, we hate to see these 
shelters concepts of this system get weakened. 

Now, on the argument of the free mind, we don't 
question the intellectual integrity of the man before us, but 
that isn't enough. 

For generations in this country, we had a Supreme 
Court made of men expressing the free mind, upholding a very 
destructive system. That system came crashing down with Brown 
vs. Board of Education . 

But in retrospect, were those men who voted for the 
perpetuation of the old order not voicing free minds? They 
were . 

But there's a social obligation that they never 
understood, and there's a social obligation in workers' 
compensation, and we really don't think that the gentleman with 
us understands that. 

That doesn't mean he should vote blindly for the 
workers, but if there's a consistency to his voting against the 
worker, we must speak out and say that that kind of an opinion 
is out of social order, and so we are opposed. 

SENATOR CRAVEN: Thank you very much, Mr. Henning. 

Is there anyone else who wishes to speak? Yes, sir. 

MR. REITER: I'm Charley Reiter, with the State 
Building and Construction Trades Council of California, 
representing the interests of construction workers in the State 
of California. 



62 

We also are opposed to this candidacy. Labor has 
become conditioned to not being treated fairly by the law in 
this country. That's simply the history in the history books. 
Workers' comp. systems have been at variance with that. They 
have attempted to give us at least an even break. 

In this instance, we feel the tendency is to go back 
into the past and to affect fairness adversely, and for these 
reasons, and those stated by others here, we are opposed to this 
candidate . 

Thank you. 

SENATOR CRAVEN: Thank you very much. 

Anyone else that wishes to offer comment, pro or con? 

Any Members of the Committee? 

If not, a summation, if you would. 

MR. JOHNSON: Just a few comments. 

As a member of the Commission, I certainly view my 
responsibility as being bound by the law. I'm well aware of the 
Garza rule, the rule of Garza . Garza holds that the findings -- 
when the findings of the Workers ' Compensation Judge are based 
upon ample, credible, sound evidence, such findings are to be 
given considerable weight by the Board and should only be 
overturned when there is evidence of substantial -- considerable 
substantiality to the opposing proposition. 

The key, as I see it, is the beginning of the 
definition; namely, that the Workers' Compensation Referee has 
ample, sound, credible evidence. The Board is given powers to 
examine the complete record, to re-weigh the evidence, to 
certainly make its own credibility findings. 



63 

I submit that my opinions have reflected an 
examination of the record, that I have demonstrated through my 
writings that the judges ' findings are not based upon that 
sound, credible evidence. And so, I was duty-bound to find to 
the contrary. 

Two cases have come up that I haven't touched on; 
namely, the case of Jack Thompson vs. City and County of San 
Francisco . That was a case where — and all these cases are 
very difficult, and one does not take lightly the proposition 
that dependents, spouses or children, will be deprived of death 
benefits. Here was an instance of an injured worker traveling 
to his place of employment who suffered a subdural hemotoma, had 
a stroke, and was transported to the hospital. This man had -- 
he was of average height, weighed 240 pounds. On autopsy, his 
heart was found to weigh 725 grams as opposed to the average 
heart weighing 40 grams. 

It was found that this man had a long history of 
hypertension. The record reflected that he had been advised by 
his physicians to take hypertensive medication. Through 
testimony from his wife and from others, this gentleman chose 
not to take this medication, and as the physicians whom we 
relied upon pointed out, that this man's demise was not due to 
the conditions of his employment but rather to hypertensive 
arteriosclerotic cardiovascular disease. It was a most 
unfortunate -- unfortunate case. 

The Boyd , the John Boyd vs . Chevron case, was another 
very, very peculiar case. The case essentially resulted in a 
100 percent permanent disability award issued to a gentleman 



64 

whose diagnosis really couldn't be pinpointed by any particular 
physician. This gentleman had been, for a period of years, a 
tanker truck operator for the Chevron Corporation. 

The manifestations of his illness subsequent to his 
employment by several months, up to a year, had one set of 
physicians saying that he had early onset Alzheimer's disease. 
Other doctors characterized it as dementia. Some doctors felt 
it was organic brain syndrome. No doctor could put his finger 
on it, but I was of the impression that the physicians retained 
by the employer had much more persuasive, sound, and believable 
evidence. 

Essentially, the argument made by the injured 
worker's representatives is that his exposure to petrochemicals 
as a tanker truck operator led to this serious condition. Yet, 
through the toxicologists , the epidemiology reports, there had 
been not a single other case similar to this unfortunate case 
involving Mr. Boyd. 

Again, not looking at any prejudgment, but based upon 
my independent and comprehensive examination of the record, I 
felt bound to draft an extensive dissent. 

And it's -- these cases are never easy to make. 

CHAIRMAN LOCKYER: Do you feel like you've concluded? 

I'm sorry. I had to run up to another committee to 
cast a vote. I've had a nice summary from the staff and Senator 
Craven as to what's transpired. 

What there anything at this point -- 

MR. JOHNSON: Just in a nutshell, sir, it's 
unfortunate that those who have exercised their right to oppose 



65 

me have not had an opportunity to review my full and complete 
record. 

I participated in, up through February 18, in 1,396 
cases, and since February 18, I have been on several hundred 
more cases . 

I submit that I've been fair, balanced, and 
even-handed. I've taken the extraordinary step of transposing 
my deliberation sheets in some 81 cases in which I certainly 
found in favor of the injured workers. 

I'm sorry that members of the persons who -- members 
of the California Applicants' Attorneys Association, and those 
very distinguished members of the labor community, have not had 
access to these writings. 

That I've been absolutely perfect in the performance 
of my duties as a human being, certainly I've erred. However, I 
do submit that I have made great strides and endeavored to 
perform in an admirable way. 

The beginning of my workday is typically before 7:00, 
always the first Commissioner there. Typically one of the last 
to leave. I put in many a Saturday with regard to performing 
these duties. 

I would ask that my full record, my complete record, 
as best that the Senators have had access to, be evaluated, a 
record that is inclusive of not only these past 11 months, but 
of practice of the law in representing not only employers but 
also injured workers. 

I close on that, sir. 

CHAIRMAN LOCKYER: Mr. Johnson, I don't think anyone 



66 



has any question of your work ethic, personal integrity, or 
intellect. You clearly are outstanding in those ways. 

The question has been whether, for whatever reason, 
work history, or temperament and philosophy, the question's been 
whether you seemed just to regularly fall on the anti-worker 
side of these debates. It appears to me, at least based on the 
information that we have, that there is that pattern. 

It's very hard, as I'm sure it is for you, everytime 
you see a case, to make a judgment here about an individual that 
you prefer not to have to render. 

We have one week before the final, final deadline, 
and so I don't know what additional information we could try to 
uncover that would permit what you regard as a more thorough 
examination of the record. 

I mentioned this one statistic earlier of 36 cases in 
which your written opinions were 35 dissents that ran to the 
carrier or employer perspective. And while I respect your 
advocacy, it seems like that's what it is, is misplaced advocacy 
in a judicial setting. 

Any questions from Members? What's the pleasure of 
the panel? 

SENATOR BEVERLY: Are you suggesting a week's delay? 

CHAIRMAN LOCKYER: I don't know what we would learn 
that would benefit, unless there's Members that think there 
would be some additional benefit. 

Senators Craven or Beverly, do either care to make a 
motion? 

SENATOR CRAVEN: I would like to move the 



67 



confirmation, Mr. Chairman. 

CHAIRMAN LOCKYER: That's appropriately before us 

Please call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: No. 

SECRETARY WEBB: Ayala No. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: No. 

SECRETARY WEBB: Petris No. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: No. 

SECRETARY WEBB: Lockyer No. Fails two to three. 

CHAIRMAN LOCKYER: I'm sorry. 

MR. JOHNSON: Thank you, Senators. 

[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
4:55 P.M. ] 

--00O00-- 



68 



CERTIFICATE OF SHORTHAND REPORTER 



I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing transcript of the Senate Rules Committee hearing 
was reported verbatim in shorthand by me, Evelyn Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

Jj IN WITNESS WHEREOF, I have hereunto set my hand 



this 



day of April, 1994 . 



f 




/ 







VELYN'J. MI 
Shorthand Re 




252-R 

Additional copies of this publication may be purchased for $5.50 per copy 
plus 7.75% California sales tax. 

Senate Publications 
1020 N Street, Room B-53 
Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 252-R when ordering. 



Soc> 






* 



'/s 



7 



y L 

^HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

MONDAY, APRIL 18, 1994 
1:45 P.M. 



pr"*MM**tf 5 DEPT. 

APR 2 6 1994 

« HANCloCO 

PUbUC LIBRARY 



253-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 113 
SACRAMENTO, CALIFORNIA 



MONDAY, APRIL 18, 1994 
1:45 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM LOCKYER, Chair 

SENATOR RUBEN AYALA 

SENATOR ROBERT BEVERLY 

SENATOR NICHOLAS PETRIS 

MEMBERS ABSENT 

SENATOR WILLIAM CRAVEN, Vice Chair 

STAFF PRESENT 

CLIFF BERG, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

HEATHER A. CLAYTON, Member 
State Board of Education 

DONALD R. HILL, Warden 

California Correctional Institution at Tehachapi 

Department of Corrections 

LEON RALPH 

Association of Black Correctional Workers 

LEWIS N. JONES, Warden 

North Kern State Prison at Delano 

Department of Corrections 

JAMES GOMEZ, Director 
Department of Corrections 



Ill 



INDEX 

Page 
Proceedings 1 

Governor's Appointees; 

HEATHER A. CLAYTON, Member 

State Board of Education 1 

Experience on Board 1 

Questions by CHAIRMAN LOCKYER re: 

Board's Action on Writings of Alice Walker .... 2 
Questions by SENATOR AYALA re: 

Opinion on Voucher Initiative 3 

Motion to Confirm 4 

Committee Action 4 

DONALD R. HILL, Warden 

California Correctional Institution at Tehachapi 

Department of Corrections 5 

Background and Experience 5 

Questions by CHAIRMAN LOCKYER re: 

History of Grievances 6 

Resolution of Any Possible Grievances .... 7 

Inmate Work Training 7 

Opinions on Ways to Decrease Recidivism 8 

Questions by SENATOR PETRIS re: 

Percentage of Overcrowding at Institution .... 9 

Estimate in Future with "Three Strikes" ... 9 

Public's Perception of Color T.V.s in All Cells . 10 
Questions by CHAIRMAN LOCKYER re: 

Televisions for Inmates 11 



IV 

INDEX (Continued^ 

Questions by SENATOR AYALA re: 

Drug and Alcohol Use in Prisons 11 

Use of Search Warrants 12 

Recommendations to Eliminate Problem 12 

Questions by CHAIRMAN LOCKYER re: 

Range of Levels of Security 13 

Ways to Provide Less Expensive Custody for 

Minimum Level Inmates 15 

Witness in Support: 

LEON RALPH 

Association of Black Correctional Workers 15 

Motion to Confirm 16 

Committee Action 16 

LEWIS N. JONES, Warden 

North Kern State Prison at Delano 

Department of Corrections 17 

Background and Experience 17 

Questions by CHAIRMAN LOCKYER re: 

Ethnicity and Genders of Other Wardens 19 

Questions by SENATOR AYALA re: 

Drug Problem within Prisons 2 

Questions by SENATOR PETRIS re: 

Recidivism Rate 21 

Pattern for Re-Offenders 21 

Education Level of Inmates 2 2 

Percentage of Inmates Participating 

in Educational Programs 2 3 

Questions by CHAIRMAN LOCKYER re: 

Inmates Working while Incarcerated 2 4 



V 



INDEX (Continued) 

Estimate of Budget Increase Needed to 

Hire Employees to Replace Inmate Workers 2 4 

Political Affiliation 25 

Questions by SENATOR PETRIS re: 

Work with Migrant Farmworkers 2 5 

Witness in Support: 

LEON RALPH 

Association of Black Correctional Workers 2 6 

Motion to Confirm 2 7 

Committee Action 2 7 

Termination of Proceedings 2 7 

Certificate of Reporer 28 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN LOCKYER: We have three appointees to visit 
with today, the first being Heather Clayton, State Board of 
Education. 

Please, if you'll come on up. 

MS. CLAYTON: Hello. 

CHAIRMAN LOCKYER: Good afternoon. 

Do you want to talk for a minute about your job here? 

MS. CLAYTON: Sure, I'd love to. 

I've been serving unconfirmed on the State Board of 
Education now since August and having a wonderful time. 

I think the experience from my past that has been 
most valuable in my efforts this past few months has been my 
involvement with various statewide organizations that have given 
me experience traveling around the state and seeing the needs of 
my peers . 

I've learned of the importance of incorporating a 
student perspective into the proceedings on the State Board of 
Education. I think it's really wonderful that our system is 
such that we do include student input directly onto the State 
Board and onto education decisions. 

So, I've enjoyed serving and incorporating my first- 
hand perspective of education into the State Board. 

Do you want me to elaborate on any of that? 

CHAIRMAN LOCKYER: No, I think that's good. 

I think it's commendable that you can get a grade 
point average higher than straight A also. My compliments. New 



math? 

MS. CLAYTON: Exactly. 

CHAIRMAN LOCKYER: You get extra bonuses. 

Were you there when the Board recently kind of went 
off on a detour regarding Alice Walker's writings and things of 
that sort? 

MS. CLAYTON: I was. 

CHAIRMAN LOCKYER: Can you talk about that for a 
moment and what your thoughts were? 

MS. CLAYTON: Well, I — the issue was that there was 
some material written by Alice Walker removed from the 199 3 
version of the CLAS test. 

And my feeling is that we should avoid censorship at 
all costs. 

It was rather ambiguous about whether or not that was 
an actual scenario of censorship, and I'm pleased to have voted 
along with the Board to put Alice Walker's stories back into the 
pool of possible test items in the future. 

I think that mostly the reason why the stories were 
removed in the first place was just because of the breach of 
confidentiality, and that for the sake of having a safe test and 
a fair test, that none of the students would have an advantage 
because they already knew what selections would be used in the 
test. It was only possible at that point to remove the Alice 
Walker stories. 

But I'd hope that in the future, we can incorporate 
her stories and incorporate a very diverse group of stories in 
school testing. 



CHAIRMAN LOCKYER: Questions from colleagues? 
Senator Ayala. 

SENATOR AYALA: What was your opinion on the school 
choice initiative which was defeated by the voters last 
November? Do you think it ' s a good move to give everyone a 
choice of schools and provide public funds for private schools? 

MS. CLAYTON: I think that I am — I support 
definitely the concept of competition. And looking back now on 
the 174 issue, I see that indirectly, and I don't know if it was 
intentionally, it really has created some change in education. 

Frequently now, I'll attend a meeting when someone 
will say, "You know, we'd better clean up our act because those 
voucher people might come along again, and we need to be 
spotless . " 

So, I think it's sort of been an incentive and, you 
know, a kick to get people going and clean up their acts a 
little bit better. 

I think I'd have to agree with my colleague, Gertie 
Thomas, when she said that she wouldn't support an initiative 
that didn't dot all of its "i's" and cross all of its "t's". 

Whether or not 174 did that, I wasn't even 18 yet, so 
I didn't have to vote. 

[Laughter. ] 

CHAIRMAN LOCKYER: You're doing very well today. 

MS. CLAYTON: But I would hope that in the future, if 
we did have a new voucher-type bill come along, I'd hope that it 
would dot all its "i's" and cross all of its "t's". 

SENATOR AYALA: So you feel that closeness of the 



vote kind of gave an awakening call to the administrators of 
California that changes are necessary? 

MS. CLAYTON: I think it definitely did. I think it 
showed that parents do want to become more involved, which I 
definitely applaud. I would say that one of the major problems 
right now in education is that parents aren't involved enough. 
So, if parents want to be more involved, I say great, and I'd 
hope that schools have really noticed that there is a need out 
there for parents to have more opportunities to get involved. 

SENATOR AYALA: Thank you. 

CHAIRMAN LOCKYER: Are there other questions? 

Is there anyone present who'd wish to comment, either 
for or against the nomination? 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN LOCKYER: We have a motion by Senator 
Beverly. 

Call the roll, please. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris. 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Four to zero. 

CHAIRMAN LOCKYER: Congratulations. Keep up the good 



work. 

MS. CLAYTON: Thanks. 

CHAIRMAN LOCKYER: Don Hill is our next matter. 

Good afternoon, sir. 

MR. HILL: Good afternoon. 

Mr. Chairman, distinguished Members of the Committee, 
I bring to you today 2 9 years and 11 months of correctional 
experience. I've served at five different institutions, two 
field operations, and I served in Headquarters, Departmental 
Headquarters . 

I started my career with the Department of 
Corrections in 1964 as a correctional officer. I promoted up 
through the ranks to Captain. At that time, I transferred to 
our Law Enforcement Liaison Unit as a Special Agent; promoted to 
a Senior Special Agent. I also coordinated the Prison Gang Task 
Force for two years; promoted into Correctional Administrator, 
and I headed up the Department's Investigative Services Unit. 

I then promoted to Chief Deputy Warden at the 
Correctional Training Facility in Soledad, and I served there 
until January of this year, when I was appointed Warden at the 
California Correctional Institution at Tehachapi. 

I believe that experience and my accomplishments in 
the Department, I believe I can serve the people of the State of 
California well as Warden at the California Correctional 
Institution at Tehachapi. 

CHAIRMAN LOCKYER: Thank you, sir. 

Let me ask if there's anyone present who would wish 
to comment on the appointment. 



Are there questions from Members of the Committee? 

Let me ask about the history of any grievances under 
your administration. Can you recall, perhaps, whether there 
have been grievances filed and the results have been when you 
were in charge? 

MR. HILL: At Tehachapi, I've only been there three 
months , and to my knowledge there ' s been no grievances . 

CHAIRMAN LOCKYER: Prior? 

MR. HILL: Are you talking about inmate grievances, 
or are you talking about staff grievances? 

CHAIRMAN LOCKYER: Staff. 

MR. HILL: There certainly have been grievances filed 
of a minor nature that have been resolved. Some, of course, I 
may have denied; some, based on the grievance, if it had merit, 
of course, I would have granted the grievance. 

I try and look at each one on its own merit. 

CHAIRMAN LOCKYER: Do you recall whether there were 
ones claiming discrimination or sexual harassment on your watch, 
grievances? 

MR. HILL: Against me? 

CHAIRMAN LOCKYER: Yes. 

MR. HILL: No, sir. 

CHAIRMAN LOCKYER: But perhaps against some other 
officer, going back to, I guess, the Soledad days? 

MR. HILL: In the '70s? 

CHAIRMAN LOCKYER: No, the more recent, while you 
were a Chief Deputy. 

MR. HILL: There were allegations of some sexual 



harassment probably while I was there. 

CHAIRMAN LOCKYER: How do you think those resolved? 

MR. HILL: I think they were all resolved positively. 

If people were guilty of sexually harassing people, 
we dealt with them very aggressively. 

I might add that disciplinary action is taken by the 
Warden rather than the Chief Deputy Warden. 

CHAIRMAN LOCKYER: So it would go straight up to him. 

MR. HILL: Yes, sir. 

CHAIRMAN LOCKYER: It wouldn't be your responsibility 
to work that out? 

MR. HILL: The Warden administers adverse actions, 
yes . 

CHAIRMAN LOCKYER: So you haven't had to sit on any 
of those while you've been acting Warden? 

MR. HILL: I don't recall sitting on any of those for 
that specific act, anyway. 

CHAIRMAN LOCKYER: How is Tehachapi in terms of its 
capacity to do work training? Are there waiting lists, or are 
you able to accommodate those that are interested? 

MR. HILL: For inmates? 

CHAIRMAN LOCKYER: Yes. 

MR. HILL: We have — no, I can't accommodate them 
all. 

CHAIRMAN LOCKYER: Cannot. 

MR. HILL: We probably have 35-40 percent 
nonemployment or not engaged in activities . 

CHAIRMAN LOCKYER: How much? 



8 

MR. HILL: Thirty-five to forty percent. 

CHAIRMAN LOCKYER: And are those the ones that would 
wish to be in a program, do you think, if they were available? 

MR. HILL: I would say probably close to that, yes, 
sir. 

CHAIRMAN LOCKYER: Mostly they would wish, so you 
have maybe close to two-thirds that are. 

MR. HILL: Of some type of — 

CHAIRMAN LOCKYER: Some sort of a program. 

MR. HILL: Yes. 

CHAIRMAN LOCKYER: And then a third or so that are 
not, a little higher than that that aren't. 

MR. HILL: Yes. 

CHAIRMAN LOCKYER: Any thoughts about what works 
best? What can you do when you have them in your custody to try 
to not have them come back again? 

MR. HILL: I think education helps. I think any kind 
of training program helps. 

I think that any time you have people in custody, if 
you have an open line of communication, I think all of that 
contributes . 

If you ask me do I have an answer for the crime, no, 
sir. 

CHAIRMAN LOCKYER: But just to try to do what you can 
do while they're in your custody to constrain the amount of 
re-offending? 

MR. HILL: I think we have to offer programs for 
them. Hopefully, by offering the programs of education, 



vocational training, so that when they got on to the streets, 
they have a good chance of being productive citizens. 

CHAIRMAN LOCKYER: Thank you, sir. 

Other questions? Senator Petris . 

SENATOR PETRIS: Thank you, Mr. Chairman. 

What is your overcrowding ratio there at Tehachapi? 

MR. HILL: I'm at roughly 200 percent. 

SENATOR PETRIS: Two hundred percent? 

MR. HILL: Yes, sir. 

SENATOR PETRIS: Have you tried to estimate what it's 
going to be when "Three Strikes, You're Out" gets rolling? Have 
you done a study in your prison, or has anybody? 

MR. HILL: Not at my prison that I know of. I hope 
it's not more than 200 percent. 

SENATOR PETRIS: Two hundred more? 

MR. HILL: I hope not. 

CHAIRMAN LOCKYER: You mean to 4 00 percent, or you'll 
stay at 200? 

MR. HILL: I hope not. 

CHAIRMAN LOCKYER: Well, if I may, Senator -- 

SENATOR PETRIS: Yes. 

CHAIRMAN LOCKYER: That presumes that the definition 
of overcrowding is, you should have one per cell, and you've 
generally got two? 

MR. HILL: That's correct. 

CHAIRMAN LOCKYER: It may be we're going to re-do the 
definition so it will be clear that two is the standard. Then 
you wouldn't have as much overcrowding, would you? 



10 

MR. HILL: I'd have a little bit, but not 200 
percent. 

CHAIRMAN LOCKYER: Pardon me for interrupting. 

SENATOR PETRIS: I had a meeting with some people in 
my district over the weekend, and a couple of very angry 
citizens demanded to know why we coddled our prisoners the way 
we do, and give them a lot of luxuries. And they insisted that 
every prisoner has a color t.v. set in the cell, paid for by the 
taxpayer. 

Is that true? 

MR. HILL: That's incorrect. 

The state does not give any inmate a color t.v. for 
his cell. 

SENATOR PETRIS: Well, I didn't tell them it was 
incorrect. I told them it was a damn lie — 

[Laughter. ] 

SENATOR PETRIS: — and who ever told them that ought 
to be called to account, because you hear it all the time. You 
know, you hear a lot of other things, too. 

So, since you're an official at a high level, I just 
wanted to confirm, at least as to your prison where you are. 
How about the rest of them? You have knowledge of the rest, 
don't you? 

MR. HILL: I've been at several institutions, and we 
don't supply t.v.s for every cell, so I would still say it's 
incorrect. 

SENATOR PETRIS: Thank you. 

CHAIRMAN LOCKYER: You do supply? 



11 

MR. HILL: We do not. 

CHAIRMAN LOCKYER: Do you supply any? 

MR. HILL: Any t.v.s, there's t.v.s in a t.v. room, 
perhaps, for a couple hundred inmates, if they choose to go to 
the t.v. room. 

CHAIRMAN LOCKYER: How do they decide what to watch? 
The big guy named Spike decides? 

[Laughter. ] 

MR. HILL: They do that by a committee. 

CHAIRMAN LOCKYER: So, there's collective ones, but 
not in every cell. 

MR. HILL: That's correct. 

CHAIRMAN LOCKYER: Senator Ayala. 

SENATOR AYALA: I was just going to say that the 
public perception is that there's a lot of drug and alcohol use 
within the prison system by the inmates. If it's true in your 
prison or not, I'm not sure, but if there is, what are you doing 
to try to eliminate it or eradicate that problem? 

How is it that we can get drugs and alcohol into the 
prison system, into the inmates? People don't understand how or 
why that should happen. 

MR. HILL: On many occasions, visitors can bring 
drugs into the institution by secreting it. 

At Tehachapi, we have a very active program where, 
when we have information that narcotics is coming in, we secure 
a search warrant, and we serve many search warrants at our 
visitor entrance. And if they do in fact have drugs, then 
they're arrested and placed in jail. 



12 

SENATOR AYALA: When the visitors come into the gate, 
and you suspect that perhaps they are carrying drugs or alcohol, 
you get a search warrant? 

MR. HILL: Yes, sir. 

SENATOR AYALA: From whom? Is some judge around to 
issue that? 

MR. HILL: A local judge, yes, if we have information 
ahead of time. 

SENATOR AYALA: You hold them at the gate until you 
get a search warrant from the judge? 

MR. HILL: We get it ahead of time, sir, if we have 
information that they — 

SENATOR AYALA: You get a blanket search warrant. 

MR. HILL: No, sir. 

If we have information that a subject is bringing in 
narcotics, then — 

SENATOR AYALA: You don't have information. Somebody 
drives up, and you suspect that they might have drugs. Then 
what? 

MR. HILL: Unless we have -- 

SENATOR AYALA: A search warrant, you can't do 
anything. 

MR. HILL: Well, we can if we have enough information 
to ask them to be searched, but there has to be some kind of 
information. 

SENATOR AYALA: What do you recommend we do besides 
that to try to eliminate that problem? 

It's dangerous to the correctional officers, for one 



13 

thing. 

MR. HILL: That's true, but I don't think I would 
want to go so far as to say that we search, unclothed search, of 
every visitor, sir. 

SENATOR AYALA: Do you have any other ideas that you 
feel might work, try it out? 

I think it's completely wrong that we have people in 
prison for committing felonies, but they have access to drugs 
and alcohol from within. It just doesn't make sense to the 
general public. 

MR. HILL: And I would have to say that I don't think 
that the narcotics is as prevalent as perhaps some of the public 
believes. It does get into the institution. I would not say 
that it doesn't, but I think we work very actively to defect it 
and act on it. 

SENATOR AYALA: You don't think the problem's that 
serious? 

MR. HILL: I think if we have any narcotics in the 
prison, it's serious. I don't want to minimize it, but I think 
we're handling it very well at this point. 

CHAIRMAN LOCKYER: The range of levels of security 
that reflect the need to provide for different kinds of 
offenders — minimum, medium, high -- Ones are obviously 
minimum. What are twos? 

MR. HILL: Medium. 

CHAIRMAN LOCKYER: What is distinction between those 
two categories? 

MR. HILL: The medium facility has armed towers, 



14 

double fencing. The minimum security, some minimum facilities 
have — do not have armed towers . 

CHAIRMAN LOCKYER: And how is it that the inmates are 
different? 

MR. HILL: By classification score, depending on 
their commitment offense, their education, how long they've been 
in, whether they've had disciplinaries . A lot of things account 
for the score. 

CHAIRMAN LOCKYER: If you had to kind of, as a rule 
of thumb, try to perhaps over summarize something that I could 
understand, how would a One be, maybe, different in an aggregate 
way from a Two? 

MR. HILL: Less violent crime, probably. 

CHAIRMAN LOCKYER: The crime that they committed? 

MR. HILL: Yes, and perhaps married, more education, 
a lot of things contribute to it, but less security risk. 

CHAIRMAN LOCKYER: When you say less, I guess the 
bulk of our prisoners are still drug offenders? 

MR. HILL: About 42 percent are violent crimes; 
probably about 26 percent are drug offenders. 

CHAIRMAN LOCKYER: Violent meaning armed robbery? 

MR. HILL: Murder. 

CHAIRMAN LOCKYER: Assault, and so on, rape. 
Burglars would be where? Are they in that 42, or are they in 
the other bundle? 

MR. HILL: Burglar, if it's strictly a house 
burglary, they're probably be in the nonviolent. 

CHAIRMAN LOCKYER: That would be the side they'd fall 



15 

on? 

Do you have any thoughts about how we might provide 
for, let's say, the Level I type prisoner in a less expensive 
setting? Are there ways to try to accomplish that? 

MR. HILL: There probably are. I don't think that 
we've been very successful at doing that in the past. 

CHAIRMAN LOCKYER: If any light bulbs go off, I hope 
you'll feel free to call or write. 

MR. HILL: Yes, sir. 

CHAIRMAN LOCKYER: Mr. Ralph, did you wish to make a 
comment? 

Reverend, nice to see you. 

MR. RALPH: Thank you, Mr. Chairman. 

CHAIRMAN LOCKYER: Bishop, pardon me. 

MR. RALPH: Congratulations, sir. I haven't appeared 
before a committee that you've chaired in a decade at least. 

CHAIRMAN LOCKYER: Since you were an Assemblyman, 
probably. 

MR. RALPH: Yes, that's right. 

Mr. Chairman and Members, thank you for the 
opportunity to appear before you. 

I appear as a lobbyist for the Association of Black 
Correctional Workers. We have checked with our membership, and 
we have certainly no problem with this nomination. Therefore, 
we are in support of it and would urge confirmation in your 
wisdom. 

CHAIRMAN LOCKYER: Thank you. 

Did I inquire if there is anyone else present who 



16 

wishes to either support or oppose? 

What's the pleasure of the Committee? 

SENATOR PETRIS: Move. 

CHAIRMAN LOCKYER: We have a motion by Senator 
Petris . 

Call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris. 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Four to zero. 

MR. HILL: Thank you very much. 

[Applause. ] 

CHAIRMAN LOCKYER: Who are all these people? 

MR. RALPH: Ex- inmates. 

CHAIRMAN LOCKYER: You brought inmates with you, I 
see . 

[Laughter. ] 

CHAIRMAN LOCKYER: No, no, I'm just teasing. Please 
don't take offense. 

Now I guess we have Mr. Jones as the next appointee. 

[Applause. ] 

CHAIRMAN LOCKYER: You're the one who brought the 



17 



inmates . 

[Laughter. ] 
SENATOR AYALA: Can I inquire, Mr. Chairman, who's 

manning the prison? 

[Laughter. ] 

CHAIRMAN LOCKYER: Mr. Jones, do you want to start 
with — 

MR. JONES: Mr. Chairman, distinguished Committee 
Members, I'm honored to be afforded the opportunity to appear 
before you today to explain my qualifications. 

I have over 20-plus years with the Department of 
Corrections; 11 of those years has been as a manager: Program 
Administrator, Associate Warden, Chief Deputy Warden, and New 
Prison Manager, and also including my new position as Warden at 
Delano or North Kern State Prison. 

I began my career in 1968 as a correctional officer 
at Tehachapi. And thereafter, I left state service and went to 
work for the War on Poverty as the Executive Director of a tri- 
county child development day care center for migrant farmworkers 
and as an emergency food coordinator for a multi-million dollar 
emergency food program. 

In '73, I returned to the Department of Corrections 
as a correctional officer at California Men's Colony; '74, I 
went to Tehachapi, which is California Correctional Institution. 
In '75, I was promoted to Correctional Program Supervisor I. 
Soon thereafter, I took a training and development assignment as 
a Canteen Manager II, then I was promoted to Soledad as a 
correctional sergeant. 

In '77, I was promoted to Correctional Program 



Supervisor II at Tehachapi . In '78, I was assigned to the 
Academy, Correctional Training Academy at Modesto and Norco CRC , 
California Rehabilitation Center, and I was promoted to 
Correctional Counselor I. 

In 1980, I was promoted to correctional lieutenant at 
California Rehabilitation Center. And then, the latter part of 

1981, I went to California Correctional Institution at 
Tehachapi, and I was a disciplinary hearing lieutenant. In 

1982, I was promoted to Correctional Counselor II. In 1983, I 
was promoted to Program Administrator. 

In 1987, I was promoted to Correctional Administrator 
at Avenal as part of the activation team. In 1988, I was 
promoted to Chief Deputy Warden at Sierra Conservation Center. 
In 1989, I returned to Avenal State Prison as Chief Deputy 
Warden, and in 1990, I was appointed New Prison Manager at 
Delano Prison, now known as North Kern State Prison. Currently, 
I've been acting Warden since April of '93. 

I think that we have a tremendous operation down 
there, and I think that's a tribute to the staff that work at 
North Kern State Prison. 

My formal education includes a Bachelor of Arts 
degree in political science with a minor in African-American 
history. I'm a trained hostage negotiation trainer and a 
conflict resolution trainer. 

I feel that today's correctional setting requires an 
administrator that has a diverse background, and I feel I have 
that diverse background. 

I don't think that, as administrators, we can lose 



19 

sight of our primary responsibility, though, and that's 
protecting the public and ensuring that we retain those people 
that are sent to us to do their time. I think there's quite a 
few different ways of accomplishing that, and I think the 
important areas that I'd like to cover is academic and 
vocational education program, instilling a work ethic. That's 
really important. I think religious programs, as well as 
Narcotics Anonymous and Alcoholics Anonymous -- substance abuse 
is a big problem in our society, and I think that's something 
that we should be addressing in the penal setting. 

I think my management style, and what I try to foster 
at North Kern State Prison is treatment of people, public 
safety, and safety and security at the institution. And I think 
that that philosophy within itself, with the staff there being 
concerned with how they treat others, it carries on to the 
inmate population. And I think this instills some expectations 
with the inmate population in terms of dignity and how we treat 
other people. And I think that's a tribute, largely, to the 
lack of violent incidents that we've had at North Kern State 
Prison this last year. 

So, I feel, with this Committee's continued support, 
we can continue to do the outstanding job that North Kern State 
Prison is doing. 

CHAIRMAN LOCKYER: Do you know off-hand what the 
ethnic or gender characteristics are with all the other wardens? 
Do those come to mind? 

MR. JONES: Well, I think that we have at least six 
African-American wardens, and probably six Hispanic wardens. 



20 

And I think we have one Pacific Islander. 

CHAIRMAN LOCKYER: Do you have one woman? 

MR. JONES: We have more than one woman, yes. 

CHAIRMAN LOCKYER: A warden? 

MR. JONES: Yes. 

MR. GOMEZ [from the audience]: It's 28 percent 
women, 2 7 percent African-American and 25 percent — 

CHAIRMAN LOCKYER: These are the wardens? 

MR. GOMEZ: Wardens. And 25 percent — 

CHAIRMAN LOCKYER: So, a fourth of the wardens are -- 

MR. GOMEZ: A fourth of them are African-Americans, a 
fourth are Hispanic, and almost a full third are -- 

CHAIRMAN LOCKYER: Well, you're sort of triple 
counting, but that's okay; we all do that. 

But anyhow, a fourth are female, yes. 

Are there questions? Senator Ayala. 

SENATOR AYALA: Other than to ask the same question I 
asked the other gentleman about the drug problem. 

Is there a problem that you recognize in your prison, 
or do you think it's a problem but not that difficult to deal 
with, and what are you doing about it? 

MR. JONES: Well, Senator, I think any amount of 
narcotics in a penal institution is too many, too much. 

What we're doing at North Kern State Prison is, we're 
actively addressing that problem, knowing that from time to 
time, narcotics are going to be attempted to be introduced into 
the prison setting. So, continuous searches, continuous 
intelligence. And when we find it, we aggressively deal with 



21 

it. 

CHAIRMAN LOCKYER: Senator Petris . 

SENATOR PETRIS: What's your recidivism rate compared 
to the other institutions? 

MR. JONES: Well, ours is a reception center, so our 
primary mission is preparing inmates, as they enter into the 
system, to go off into other — other institutions. So, we're a 
processing unit. 

SENATOR PETRIS: Don't you have 500 — 

MR. JONES: We have 500 people that work for us — 

SENATOR PETRIS: — that are permanent residents? 

MR. JONES: — plus 200 on the outside. 

I could not give you any statistics, Senator, on our 
recidivism, because we've only been in activation a year's time. 
But our work force that we're utilizing to run the institution, 
the other inmates, is pretty stable, so we've been fortunate in 
that aspect. 

SENATOR PETRIS: In the other prisons where you 
served, what is the pattern when somebody comes back? You know, 
they go out, and then they commit another crime, or they violate 
the parole, and come back. 

Is it the policy of the warden to sit down and have a 
huddle with that person, who has sworn on ten stacks of Bibles 
before the board, that they'll never come back, they're going to 
go straight, and so forth? 

The public is very concerned about these repeat 
offenders. That's what the current complaints are all about. 

MR. JONES: Unfortunately, there are repeat 



22 

offenders, and that's something that we have to continue to 
address . 

As far as wardens sitting down and talking to them, 
I've walked around the yards as an Associate Warden and as the 
Chief Deputy Warden, and as a Warden, and talking to inmates who 
have returned for various reasons . 

Part of their problem is that they have not accepted 
responsibility for their own actions. That's something, as a 
society, we've got to keep educating people to do, because 
they'll tell you 1,001 reasons why they shouldn't be there, but 
they forget to say the reason why they're there is they broke 
the law. 

I think the problem is that we've got to educate the 
public to know that if we want a meaningful society, we've got 
to follow the law. 

Now yeah, I guess we could sit down and talk to those 
individuals more, but I think we still got to instill in them 
that the reason they're there is because of their actions. 

SENATOR PETRIS: Speaking of education, I notice 
about 65 percent of the population at Tehachapi is -- I forgot 
the grade level, but they didn't go very far in school. 

CHAIRMAN LOCKYER: Fourth grade generally in the 
whole system. 

SENATOR PETRIS: Fourth grade in the whole system, 
actually. 

Can't we do something about that? 

MR. JONES: Sure, and we are actively doing that. 
We've got education programs where we're encouraging inmates to 



23 

become involved, because part of the reasons, I feel, that 
people stray off into their own part of the law is because they 
don't know how to compete in our system. And the reason they 
don't is because they don't have the education know-all to 
compete. 

So, I think if we want to turn things around in this 
setting, we've got to attempt to educate people. They must 
learn to read, you know. They must learn to interact into the 
society as a whole. 

SENATOR PETRIS: Is learning to read and do other 
things, up to a certain level, required before anybody's 
released? 

MR. JONES: It's not required before anybody's 
released at this point, but there is an assertive effort to 
encourage people to participate in education programs, and 
surprisingly enough, inmates are doing that. 

SENATOR PETRIS: What percentage? 

MR. JONES: I don't have those numbers off the top of 
my head. I could probably say that between our education class 
and our employment, we've got roughly, out of the 7 00 people in 
our workforce, we've probably got 95 percent of those people 
employed. 

SENATOR PETRIS: Of course, yours is a little 
different from the rest. 

MR. JONES: Right. 

SENATOR PETRIS: Thank you. 

CHAIRMAN LOCKYER: Senator Petris had talked earlier 
about the public opinion, it seems largely uninformed, but that 



24 

they're country clubs, and they all have these wonderful color 
t.v.s, and so on. 

Another comment that you hear regularly, and I'd like 
to solicit your thoughts about, is: why aren't they working to 
support the prison operation? That is, why don't they do 
whatever they would do to bring down the costs by their own 
labor? 

Any thoughts about that? 

MR. JONES: Well, Mr. Chairman, I think we are doing 
that. The inmates that are engaged in the various work areas at 
North Kern State Prison are doing work that otherwise we would 
have had to pay employees to do, so that would have added to the 
cost of the inmates. 

CHAIRMAN LOCKYER: The laundry, cooking -- 

MR. JONES: Sure, laundry, the culinary area, and a 
lot of the clerical positions in our processing in R and R, a 
lot of clerical positions in our medical department that would 
have required employing people from the street. 

CHAIRMAN LOCKYER: Do you have any guesstimate as to 
how much of the budget, perhaps, would increase, or what it 
would cost if those were outside employees rather than inmate 
labor? 

MR. JONES: Well not — I would only be guessing, but 
I'm saying that if you're employing 500 inmates, you know, if 
you had to change that to an employee from the street, then you 
would have to hire at least 300 people. So, that would be a 
significant sum of money. 

CHAIRMAN LOCKYER: There's a question I want to ask, 



25 



and maybe one I should have done privately, but I won't see you 

again, hopefully. 

[Laughter. ] 

CHAIRMAN LOCKYER: I notice routinely, just on the 
biographies that come through, where people went to school, and 
their political affiliation, and their work history, and things 
of that sort. I'm noticing that it's very rare that we get from 
the Republican Governor anything other than Rs with respect to 
that, and I think that's fine. 

What I'm wondering is, and I don't expect you to 
answer directly, to try to evaluate any pressure there may be, 
or expectation that that's what you're supposed to do to succeed 
in a particular administration, so the only way I know to ask 
this is: has that always been your orientation, or did you 
change at some point during your life? 

MR. JONES: For the last ten or fifteen years it has 



been. 



Governors 



CHAIRMAN LOCKYER: At least the last three Republican 



MR. JONES: Has that been 15 years? 

CHAIRMAN LOCKYER: Well, 12. We're not quite sure 
what Jerry was . 

Are there other questions? Senator Petris . 

SENATOR PETRIS: There's something I forgot that 
caught my attention. 

You mentioned doing work with migrant farmworkers. 

MR. JONES: Yes. 

SENATOR PETRIS: Did you say day care centers? 

MR. JONES: Yes, child development day care centers. 



26 



SENATOR PETRIS: In which communities were those? 
MR. JONES: Kings, Kern and Merced Counties. 
SENATOR PETRIS: Were those state operated? 
MR. JONES: They were federally funded through 0E0 



grants . 



SENATOR PETRIS: In the '60s and '70s. Are those 
still in operation? 

MR. JONES: The one in Delano still is. I don't know 
about the other ones . 

SENATOR PETRIS: Thank you. 

CHAIRMAN LOCKYER: Bishop Ralph. 

MR. RALPH: Thank you, Mr. Chairman and Members. 

Leon Ralph, representing the Association of Black 
Correctional Workers. 

We are quite proud at the success that Mr. Jones has 
achieved within the Department, and we very enthusiastically 
support his nomination and urge you to ratify it within your 
wisdom and send it forward. 

He has, by the way, quite an entourage of people down 
from his prison. I don't know how many of them are ex-inmates 
and how many — 

[Laughter. ] 

MR. RALPH: I'm being facetious. 

CHAIRMAN LOCKYER: I think we're about to go to a 
vote, but let me inquire. There could be a whole lot of 
testimony that I don't think is necessary to achieve the right 
result, but let me just inquire for the record if there's anyone 
in opposition that would wish to comment? 



27 



I know there are numerous supporters present . 
In the absence of any, and we have none on record 
whatsoever, I think it would be appropriate to take a motion 
SENATOR BEVERLY: Move we recommend confirmation. 
CHAIRMAN LOCKYER: All right, let's call the roll 
SECRETARY WEBB: Senator Ayala . 
SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 
SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 
SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 
SECRETARY WEBB: Four to zero. 

CHAIRMAN LOCKYER: Congratulations, Mr. Jones. 
[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
3:15 P.M. ] 

--00O00 — 



28 



CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing transcript of the Senate Rules Committee hearing 
was reported verbatim in shorthand by me, Evelyn Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

yj IN WITNESS WHEREOF, I have hereunto set my hand 



this / 7 day of April, 1994. 




. MIZAK Q 



EVELYN J 
Shorthand Reporter 



253-R 

Additional copies of this publication may be purchased for $4.00 per copy 
plus 7.75% California sales tax. 

Senate Publications 
1020 N Street, Room B-53 
Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 253-R when ordering. 






HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




DOCUMENTS DEPT. 

JUL 8 1994 



SAN FRANC :*CO 
PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

MONDAY, JUNE 6, 1994 
1:52 P.M. 



254-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 113 
SACRAMENTO, CALIFORNIA 



MONDAY, JUNE 6, 1994 
1:52 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM LOCKYER, Chair 

SENATOR WILLIAM CRAVEN, Vice Chair 

SENATOR RUBEN AYALA 

SENATOR NICHOLAS PETRI S 

MEMBERS ABSENT 

SENATOR ROBERT BEVERLY 

STAFF PRESENT 

CLIFF BERG, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

JEAN E. ANDERSON, Warden 

California Rehabilitation Center, Norco 

California Department of Corrections 

JAMES GOMEZ, Director 

California Department of Corrections 

LEON RALPH 

Association of Black Correctional Workers 

MICHAEL T. PICKETT, Warden 

California Medical Facility, Vacaville 

California Department of Corrections 

MARION J. WOODS, Chairman 
Sacramento Chapter 
NAACP 

LARRY C. WITEK, Warden 

California Institution for Men, Chino 

California Department of Corrections 



Ill 



APPEARANCES (Continued^ 

FRANK R. SEARCY, President 

Chicano Correctional Workers Association 

JOHN VICARIO, Chino Chapter President 
Chicano Correctional Workers Association 
CIM Officers 



IV 

INDEX 

Page 

Proceedings 1 

Governor ' s Appointees ; 

JEAN E. ANDERSON, Warden 

California Rehabilitation Center, Norco 

California Department of Corrections 1 

Background and Experience 1 

Questions by CHAIRMAN LOCKYER re: 

Rehabilitation of Addicts 1 

Success of Current Program at CRC 2 

Budget Discussions and Legislative 

Analyst ' s Recommendations 3 

Questions by SENATOR AYALA re: 

Problems with Drugs and/or Alcohol 

within Prison Confines 3 

Recommendations for Assistance from State Level . 5 

Questions by CHAIRMAN LOCKYER re: 

Literacy Programs 5 

Waiting Lists for Programs 6 

Population Need for Literacy 6 

Questions by SENATOR AYALA re: 

Institutions in California or Drug 

Rehabilitation 7 

Design Capacity Vs. Actual Capacity 7 

Response by JAMES GOMEZ, Director 

California Department of Corrections .... 7 

Questions by CHAIRMAN LOCKYER: 

Percentage of Prison Population that Are 

Civil Commits 8 



INDEX ( Continued^ 

Witness in Support: 

LEON RALPH 

Association of Black Correctional Workers 8 

Motion to Confirm 8 

Committee Action 9 

MICHAEL T. PICKETT, Warden 

California Medical Facility, Vacaville 

California Department of Corrections 9 

Background and Experience 9 

Statements by SENATOR AYALA re: 

Rapport between CIM, Chino, and City of Chino . . 10 

Questions by CHAIRMAN LOCKYER re: 

Differences between CIM, Chino, and 

CMF, Vacaville 11 

Types of Outside Medical Contracts 12 

Possibility of Additional Facilities or 

Program Needs for HIV Population 13 

Separate Kitchens 14 

Opinion on Inmate Access to Exercise 
Equipment 

Pros and Cons to Access 15 

Questions by SENATOR PETRIS re: 

Color T.V. Sets in Every Cell 16 

Questions by CHAIRMAN LOCKYER re: 

Percentage of Individual Cells with 

Color T.V. Sets 17 

Witnesses in Support: 

LEON RALPH 

Association of Black Correctional Workers 18 



VI 



INDEX ( Continued ^ 

MARION J. WOODS, President 

Sacramento Chapter 

NAACP 18 

Motion to Confirm 19 

Committee Action 19 

LARRY C. WITEK, Warden 

California Institution for Men, Chino 

California Department of Corrections 19 

Background and Experience 20 

Statements by SENATOR AYALA re: 

Familiarity and Support for Nominee 22 

Experience with CIM 2 2 

Introduction of Nominee's Family 2 3 

Questions by CHAIRMAN LOCKYER re: 

Observations about Weights in Prisons and 

Color T.V. Sets 23 

Other Management Tools 24 

Questions by SENATOR AYALA re: 

Full Screening of Incoming Prisoners at 

CIM to Prevent Possiblity of Potentially 

Dangerous Inmates in Minimum Security Settings . . 25 

Questions by CHAIRMAN LOCKYER re: 

Hardest Part of Job 26 

Recommendations to Senators 26 

Witnesses in Support: 

LEON RALPH 

Association of Black Correctional Workers 2 8 

FRANK R. SEARCY, President 

Chicano Correctional Workers Association 2 8 



Vll 



INDEX (Continued) 

JOHN VICARIO, Chino Chapter President 

Chicano Correctional Workers Association 

CIM Officers 29 

Motion to Confirm 29 

Committee Action 30 

Termination of Proceedings 30 

Certificate of Reporter 31 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN LOCKYER: We have some Governor's 
appointees, I guess, three Wardens today, beginning with Jean 
Anderson. 

Good afternoon. 

MS. ANDERSON: Good afternoon. 

CHAIRMAN LOCKYER: Did you want to begin with any 
opening statement, or would you — well, we'll let you start it. 

MS. ANDERSON: Thank you, Mr. Chairman and Committee 
Members . It's indeed a pleasure to be here this afternoon to 
tell you a little bit about myself and why I'm qualified to be a 
Warden at CRC. 

I began my career in 1962 with the L.A. County 
Probation as a group supervisor. I bring to the Department a 
very diverse and varied background, working in both adult and 
juvenile corrections facilities and field operations. 

I worked my way through — up through Associate 
Warden and also Regional Parole Administrator. In addition, I 
was the Director of the Consumer Protection in the State of 
Utah. 

I hold a B.A. degree in sociology, and a community 
college teaching credential in police science. 

That ' s it . 
, CHAIRMAN LOCKYER: Do you want to, perhaps, tell us 
your philosophy and thinking with respect to rehabilitation of 
addicts, and what works and doesn't? 

MS. ANDERSON: What works and doesn't work? I think 



if I knew that, I wouldn't be here. I'd be making money, a lot 
of money. 

CHAIRMAN LOCKYER: What should we learn about that? 

MS. ANDERSON: I think critically for doing anything 
with addict populations, you have to get at the addict. I think 
that's why organizations such as N.A. and A. A. have been so 
successful, because they really get into a person's feeling and 
try to really change the inner person. That's what you need to 
emphasize in terms of dealing with the addict population, and to 
provide consistent and continuity of care in — from the 
institution into the parole setting. 

CHAIRMAN LOCKYER: How successful do you feel that 
your current program is at doing that? 

MS. ANDERSON: Currently, the program is in 
transition at CRC. We have taken a lot of heat in terms of 
losing some of the glamour and the effectiveness of the program 
that existed in the '60s, and we are in the process of revamping 
that program. 

And I think it will be a program that the Department 
and the State of California can be very proud of in another six 
months. Already, we've begun with requiring self-help groups as 
being mandatory for all civil addict programs — civil addict 
commitments. They have to go to a minimum of six weeks and 
three steps with the self-help groups. We've added the Cocaine 
Anonymous group to the Narcotics Anonymous and the Alcoholic 
Anonymous groups. We have increased our numbers of availability 
for the civil addict program from 250 to 1,000. 

We have also begun or regenerated our connections 



with the community, working with Parole Division and also with 
the L.A. Network to ensure that the out-patient stage for the 
civil addict program is as good as the in-patient stage is going 
to be. 

CHAIRMAN LOCKYER; I guess the Leg. Analyst has been 
critical of the program? 

MS. ANDERSON: Yes, he [sic] has. 

CHAIRMAN LOCKYER: What's currently happened in the 
budget discussions with respect to those recommendations? 

MS. ANDERSON: Keep it there, and give us some money. 

CHAIRMAN LOCKYER: Is that what — 

MS. ANDERSON: The check's in the mail. 

CHAIRMAN LOCKYER: Is that what's happened so far in 
the budget deliberations? 

MS. ANDERSON: Yes. 

CHAIRMAN LOCKYER: So, the Analyst's recommendation 
was not agreed to? 

MS. ANDERSON: To get rid of an element. Eliminate 
it, no. 

CHAIRMAN LOCKYER: Are there questions from Members 
of the Committee? Senator Ayala. 

SENATOR AYALA: Yes. 

I'd like to ask the Warden here, you know, the 
perception is that drugs and alcohol are abundant within the 
confines of a prison. 

Your prison is rehabilitate these folks . Do you have 
a problem with the drugs and alcohol within the confines of the 
prison? 



MS. ANDERSON: Absolutely. And we've taken measures 
to increase our drug detection within the institution. We have 
gone out on our own and established a contact with a local dog 
training facility who trains for all the local law enforcement, 
and made arrangement for them to come in with the dogs on 
surprise, twice a month, at no cost to the state. They will be 
trained by peace officers, and we will do it on a twice monthly 
basis . 

Additionally, we have increased our drug detection 
through our electronic monitoring of inmates' phones, and our 
recuperating — not recuperating, but our being able to stop of 
the drugs coming in from that. 

We've also added a computer to our visiting center to 
screen, better screen, our visitors and ensure that no one gets 
in that shouldn't be in, or is in for any longer period of time 
than they should be. 

Additionally, we have done some special training with 
our Receiving and Release, to a point where they're even 
opening candy bars to find drugs . And as a result of that 
extensive training, we stopped, through a package, in the little 
toffee candies with the little twists, we got 25 bindles of 
heroin that was coming into the institution. 

I think we do an excellent job at CRC, and my staff 
is really dedicated to doing that. 

We've also established a work group to specifically 
look at the drug activities in the institution. This will 
involve — our criminal activities coordinator will be the 
chairperson of that group. Additionally, there will include 



lieutenant and line staff, and we're going to use our trained 
CERT team who's been trained in drug detection to enhance that. 

So, I'm real excited about the things that are 
happening at CRC. 

SENATOR AYALA: Is there anything you think we can do 
from the state level to assist you in the security and stopping 
that traffic? 

MS. ANDERSON: Yes. 

SENATOR AYALA: Short of money. 

MS. ANDERSON: Money would help; money would help 
tremendous ly . 

The current legislation that Senator Presley is going 
through with the repeal of the Inmate Bill of Rights would be 
helpful in that regard. 

CHAIRMAN LOCKYER: Might you comment on literacy 
programs, and what your observations and experience has been? 

MS. ANDERSON: I have — I'm really fortunate, 
because I've worked both the field operation and also the 
institution. And we have both in the Parole Division and the 
institution, there's a literacy program that is very, very 
beneficial . 

In the Parole Division, we had actually families 
going in. I remember one particular family where the parolee 
was going through our literacy program there, and his mother was 
so excited about it, she got hooked into it and was getting her 
GED, and insisted that her son go into the program. 

In the institution, we run both because we have a 
space problem. We run a literacy program in the morning and in 



the evening. And I literally see inmates running to participate 
in the program. 

So, it's going very well. I think it's very 
important, and it's not just literacy, but it builds self-esteem 
and helps the person feel better about themselves, and they're 
generally more successful in making it on the streets. 

CHAIRMAN LOCKYER: Are there waiting lists, or are 
you handling everyone that — 

MS. ANDERSON: No, there are waiting lists. 

CHAIRMAN LOCKYER: How lengthy are they? 

MS. ANDERSON: More than I'd like to say. There are 
probably — I have, for the literacy program, we have about 2 00 
on the waiting list. 

CHAIRMAN LOCKYER: How many are involved in the 
program at any one time? 

MS. ANDERSON: Anywhere from 100 to 200 people. 

CHAIRMAN LOCKYER: So, a lot. 

MS. ANDERSON: Not enough, not when you have an 
inmate population of almost 5,000. 

CHAIRMAN LOCKYER: What would you guess the 
population need for literacy is, most of them? 

MS. ANDERSON: I don't know. In terms of what would 
happen, the civil addict generally tends to have some higher 
levels of education than your normal felon population. 

What I'd like to see in terms of CRC is an emphasis 
not necessarily on education and vocational, but because of this 
large program, the emphasis needs to be on just that: drug 
treatment and rehabilitation. 



SENATOR AYALA: One more question. 

Is CRC the only institution in California for the 
rehabilitation of those who are addicted to drugs? 

MS. ANDERSON: No, it's not. It is the only program 
in the county where people are civilly committed, as far as I 
know, but there are other drug programs in the Department of 
Corrections. We have the Amity Program in RJD. We also have 
the Forever Free Program at CIW, and in Corcoran we're getting 
ready to implement another drug program there . And there are 
various degrees of drug treatment going out to all the 
institutions in the state, going on. 

SENATOR AYALA: I notice that the design of bed space 
and design capacity for CRC is 2,214, and you're housing 5,110. 

MS. ANDERSON: Well, yes, just like everybody else 
is . 

I have an open dorm setting, so we can just keep 
shoving them in. 

SENATOR AYALA: Can I ask Director Gomez if we have 
anything in the pipeline to help the CRC problem there? 

MR. GOMEZ: Well, we've got a six prison bill that 
you'll have an opportunity to vote on in the near future. 

SENATOR AYALA: I'm sorry I asked you. 

[Laughter. ] 

MS. ANDERSON: You knew it would involve money; 
right? 

SENATOR AYALA: Thank you very much. 

CHAIRMAN LOCKYER: We actually encourage them to 
adjust the numbers that are used for an overcount, and assume 



8 

that double celling is the standard, in which case the 
overcrowding numbers are much less dramatic. That's the ongoing 
sort of methodological disagreement. We'd like to have some 
money left for schools in the state ten years from now. 

How many of your population are the civil commits? 

MS. ANDERSON: We have over 2500 men and over 7 00 
women that are civilly committed now. 

CHAIRMAN LOCKYER: More than half of — 

MS. ANDERSON: Yes, the numbers have gone up 
significantly . 

CHAIRMAN LOCKYER: Other questions? 

Are there people here who wish to comment? I think 
we ' re ready to vote . 

Mr. Ralph, you're a supporter, I assume? 

MR. RALPH: Yes, we are here in support of this 
nomination. 

CHAIRMAN LOCKYER: Senator Craven. 

SENATOR CRAVEN: Move. 

CHAIRMAN LOCKYER: Senator Craven makes the motion to 
recommend confirmation to the Floor. 

Why don't you call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 
Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 



SECRETARY WEBB: Craven Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Four to zero. 

CHAIRMAN LOCKYER: Good luck. 

MS. ANDERSON: Thank you very much. 

CHAIRMAN LOCKYER: Our next Warden appointee is Mr. 



Pickett. 



Good afternoon, sir. 

MR. PICKETT: Good afternoon. 

CHAIRMAN LOCKYER: Did you wish to begin with any 
opening statement at all, sir? 

MR. PICKETT: Yes, please. 

CHAIRMAN LOCKYER: Okay. 

MR. PICKETT: For the second time that I've been 
here. 

To this position I bring with me 25 years in state 
service with the California Department of Corrections. I began 
my career in 1969, as a correctional officer at San Quentin, and 
in the ensuing years have worked my way up through the ranks to 
my current position. 

I've worked in our Institutions Division, our Parole 
Division, and our Investigations Unit, along the way earning my 
Bachelor's degree in police administration from Cal . State Los 
Angeles . 

In 1991, I was promoted to the position of Warden at 
the California Institution for Men, served in that position 
until August of last year, when I as transferred to the 
California Medical Facility, again to assume the vacant position 



10 

of Warden. 

I bring with me extensive supervisory and management 
experience, a proven track record as both a leader and a 
manager. 

With the Committee's concurrence and that of the 
Senate, I hope to continue that. 

CHAIRMAN LOCKYER: You were with us before for 
purposes of Chino; was that your last appearance? 

MR. PICKETT: Yes, sir, that's correct. 

CHAIRMAN LOCKYER: What do you think, Senator Ayala? 
You've got to render judgment. How did Chino work out in the 
last — 

SENATOR AYALA: Let me say that CIM is within the 
city limits of the City of Chino. 

CHAIRMAN LOCKYER: Some think you're on the wrong 
side of the wall. 

[Laughter. ] 

CHAIRMAN LOCKYER: Go ahead; keep going. 

SENATOR AYALA: I want permission to talk to the 
Chairman after the meeting. 

[Laughter. ] 

SENATOR AYALA: Let me say seriously that because it 
is within the City of Chino that the rapport between that 
institution and the people has to be of the highest caliber. 
And since Mr. Pickett took over, and now the gentleman coming up 
next, we've never had better rapport between the community and 
the institution at CIM. That has to be, because they have to 
work together. 



11 

And I want you to know that my office never enjoyed a 
better relationship since I've been in office than I have with 
Mr. Pickett and Mr. Witek who's coming up next. 

CHAIRMAN LOCKYER: That's wonderful. 

Can't ask for much more than that. 

MR. PICKETT: I very much appreciate it. 

CHAIRMAN LOCKYER: Are there other questions from 
Members of the Committee? 

You might tell us just again, maybe mostly for our 
own education, but sort of the differences between the two 
settings, and what was the most demanding in Chino, and what's 
the most demanding in your skills in Vacaville? 

MR. PICKETT: There are some similarities between the 
two; primarily that both have a hospital, and also that because 
of the hospital, there's a lot of inmates that congregate at 
both institutions that need long-term medical care. 

Both institutions also house a sizable known either 
HIV or full-blown AIDS population. And again, they're housed 
there because of the nearness of the hospital and the medical 
care that those diseases drive in their later stages . 

After that, the differences are about 180 degrees 
opposite. Chino is a major reception center, probably the 
biggest in the state, and processes both new commitments and the 
majority of the parole violators coming back into the system 
from Southern California. 

The California Medical Facility is truly a specialty 
institution. It houses — as I've already said, there's about 
550 beds for housing either HIV or full-blown AIDS inmates. It 



12 

has about a thousand beds that are dedicated to severely 
mentally ill inmates who are treated on out-patient basis. 
There is also a 210 in-patient acute psychiatric hospital that's 
run by the Department of Mental Health that handles about 150 
acute psychotics on an in-patient basis, and about 60 as a day 
treatment . 

Over and above that, there are about 1,000 beds 
dedicated to long-term medical inmates who are not actually in 
the hospital, but again, associate with the institution because 
of its medical mission. 

The institution at Chino has 85 acute care hospital 
beds. Vacaville has 65. 

In addition to that, I run about 15 million annually 
in outside medical contracts to provide services that I'm not 
capable of, or that we don't have doctors on staff to handle. 

CHAIRMAN LOCKYER: What are those typically? 

MR. PICKETT: A lot of cancer treatment, anything to 
do with oncology. I don't have an oncologist on board, so 
typically, both Chino and Vacaville send those to the outside. 
We may try and bring the doctor in, but if it requires any kind 
of extensive out-patient treatment, they end up going outside. 

CHAIRMAN LOCKYER: Where would you send them? 

MR. PICKETT: I'm sorry? 

CHAIRMAN LOCKYER: Where would they go? 

MR. PICKETT: They go to local hospitals, or to local 
doctors in the greater either Sacramento — or, we have a real 
close tie with U.C. Davis, and we utilize North Bay and Vaca 
Valley Hospital; they're really one and the same. One's in 



13 

Fairfield, and the other's in Vacaville. 

And then there's a pretty sizable community of 
doctors around the Sacramento-Vacaville-Fairf ield area where 
we're able to provide or find the specialist that we need, and 
much the same as in the greater Los Angeles area with Chino. 

Over and above that, any kind of bone doctors that we 
need, orthopedic work. I don't have an orthopedist on board, so 
we contract for that. Any kind of heart disease, which is — as 
the inmates get older, they're a lot like us, they've abused 
themselves over the years, so we have a lot of heart disease, 
and we also contract those out. 

CHAIRMAN LOCKYER: Do you feel that you're currently 
doing all that reasonably can be done with respect to the HIV 
population? Are there additional facilities or program needs in 
that area? 

MR. PICKETT: I think we're doing a marvelous job. 
I've been either with this program or around it since about 
1985. I was the program administrator that started the first 
program at Vacaville, and now I've got the joys of having it 
again. 

I think we're doing an absolutely great job. 

One of the key things, I think, is hiring the right 
kinds of doctors. And I think we've tried to do that at Chino, 
and we tried to do that at Vacaville. The two lead doctors at 
Vacaville, that's their specialty. They're internists, but they 
specialize in infectious disease, so I think that that makes a 
great difference as far as our credibility with the inmates. 

The other thing we're trying to do nutritionally is 



14 

to treat them a lot better as far as the foods we provide, how 
we provide it, and just kind of an overall better nutritional 
aspect of what we're trying to provide to this population. So, 
I think that — 

CHAIRMAN LOCKYER: Do they have a separate kitchen? 
Is that how that — 

MR. PICKETT: We feed them at their own end of the 
institution. They have their own kitchen. I mean, the food's 
cooked in the same kitchen that everything else is, but we feed 
them just at their own end of the building. 

CHAIRMAN LOCKYER: So, they're separated from the 
general population? 

MR. PICKETT: Only in where they live. At Vacaville, 
we have them situated at the old Northern Reception Center. 
It's at the east end of the institution. And they live -- they 
know, everybody knows they down at that end. 

But other than that, they recreate, they go to the 
same classrooms, they go to the same jobs. The only job that 
they're prohibited from holding in the institution is in food 
service itself, but other than, they're just like any other 
inmate in the population. 

CHAIRMAN LOCKYER: Do you have opinions about whether 
inmates should be prohibited from having exercise equipment? 
Has that debate reached you? 

MR. PICKETT: Weights, possibly? 

CHAIRMAN LOCKYER: Yes, weights. I'm just curious if 
you have any thought about that, either pro or con? 

MR. PICKETT: I do . I have somewhat mixed emotions. 



15 

I've worked in prisons all my adult live. I started out as a 
correctional officer, so, I mean, I've been out there. 

These folks are fairly impressive, who sit on the 
weight piles all day long and exercise in their off hours, and 
they get rather large. And they — seems like they come back 
and they get bigger. 

From my experience, fortunately, those, for whatever 
reason, aren't the folks that we have to fight a lot. 
Typically, it's the other people. At Vacaville, it's usually 
the ones that suffer from a real serious mental disease that we 
end up getting into a big knock-down, drag-out fight with, and 
it's because of the illness that that happens. 

I think there is some benefit to it . I think that 
there's also some detractors that — I'm not quite sure — 
probably won't be my call how that all ends up, but there are 
some pros and, I believe, there's also some cons. 

CHAIRMAN LOCKYER: What would be the cons? Does it 
prepare them to go out and commit crimes? 

MR. PICKETT: No, I don't think it either helps one 
way or the other with going out and committing a crime. I mean, 
there aren't too many strong-armed robberies any more. Almost 
everybody's got a gun, it seems like. 

CHAIRMAN LOCKYER: It's true, or assault weapon. 

MR. PICKETT: Us and them. 

I think that it ' s probably more perception than 
anything else right now. I think we're in an environment where 
there's a lot of take-away, and I think that's one of the things 
that it's a very visual thing. You can see these people. 



16 

CHAIRMAN LOCKYER: It's some citizens that think 
they're enjoying some — 

MR. PICKETT: Too much. 

CHAIRMAN LOCKYER: Yes, some good treatment, or 
whatever . 

But beyond that, in terms of the management . of the 
population, your tilt would be that it helps more than it hurts? 

MR. PICKETT: It's not only what I think. I think 
it's basically what I know, if I were to tell you the truth. 

CHAIRMAN LOCKYER: Yes. 

MR. PICKETT: And that is that it does help. Either 
in their off hours, at least I know where they're at. We have 
very few problems in and around the weight piles. They know if 
they misbehave there, that we're going to take them. 

Mine are off limits now, and they will be for awhile, 
and I mean, that — it's a management tool for me as a warden, 
and, I think, for a lot of the others. And I think that we're 
starting to look at it that way. 

And quite frankly, they have a tendency not to 
misbehave when they ' re out there . 

CHAIRMAN LOCKYER: Thank you very much. 

Any other questions from Members? Senator. 

SENATOR PETRIS: Is there a color t.v. in every cell 
in your institution? 

MR. PICKETT: No, there's not. 

SENATOR PETRIS: I keep getting letters saying, "Get 
those t.v. sets out of the cells, those color t.v." I just 
wanted to reconfirm. 



17 

MR. PICKETT: They are out there, but there is 
definitely not one in every cell. 

SENATOR PETRIS: I guess most of them see it in the 
recreation room whenever they get into it? 

MR. PICKETT: Well, they're in a number of areas. We 
— most institutions have recreation rooms of some type where we 
do provide a t.v. for those that are indigent and don't have 
them. Those that either afford them or that we have the right 
kind of hook-up in the institution, depending on where you're at 
within the system, and there are differences from prison to 
prison, or you can have your mother or your father — they can 
have them sent in as personal property and have a small one. 

SENATOR PETRIS: The other part of the letter says, 
"I'm tired of paying for their color t.v. sets." Taxpayers. 

MR. PICKETT: Taxpayers aren't paying for them except 
for the ones that are in the t.v. rooms, and there aren't that 
many of them. 

SENATOR PETRIS: Yes, individual cells. 

MR. PICKETT: The other — the individual cells, they 
personally bought those, or their family did and sent them in to 
them. 

SENATOR PETRIS: Thank you. 

CHAIRMAN LOCKYER: How many do you think there are, 
just estimating, percentage of cells? 

MR. PICKETT: My guess would be — and I'd have 
nothing more than just kind of generally, when you walk through, 
how many you see is probably 60-7 percent have their own. I 
mean, there's a large population that have their own t.v. within 



18 

the institutions . 

CHAIRMAN LOCKYER: That was true of Chino as well? 

MR. PICKETT: Yes, yes. 

CHAIRMAN LOCKYER: No difference in that respect? 

MR. PICKETT: There may be, you know, a few 
percentage points difference, but — well, in fact to Chino, a 
good portion of them don't, because they're in the Reception 
Center, and we don't allow them to have anything in the 
Reception Center. 

Once they get out of Mr. Witek's Reception Center and 
go someplace else, then my guess would be somewhere between 60 
and 80 percent probably have their own t.v. 

CHAIRMAN LOCKYER: Other questions? 

Is there anyone present who'd wish to comment? Mr. 
Ralph, do you want to stand up? 

MR. RALPH: Mr. Chairman, ABCW supports this 
nomination. 

CHAIRMAN LOCKYER: Yes, sir. 

MR. WOODS: Marion Woods, NAACP. 

CHAIRMAN LOCKYER: You'd better come up to the mike, 
I guess. Marion, come up. 

Just identify yourself for the mike. 

MR. RALPH: Leon Ralph, representing the Association 
of Black Correctional Workers. 

We support this nomination, Mr. Chairman and Members. 

MR. WOODS: Mr. Chairman, Marion Woods, NAACP, 
Sacramento Chapter. 

Both our Sacramento Chapter and the National Chapter 



19 



4 



10 
11 



support this nomination and Mr. Larry Witek's, who comes up 
next . 
3 CHAIRMAN LOCKYER: Thank you very much. 

What's the pleasure of the Committee? 

5 SENATOR CRAVEN: Move. 

6 CHAIRMAN LOCKYER: We have a motion by Senator 

7 Craven . 

Call the roll, please. 

9 SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 
SECRETARY WEBB: Ayala Aye. Senator Beverly. 

12 Senator Petris . 

13 SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

15 SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Lockyer. 

17 CHAIRMAN LOCKYER: Aye. 

18 SECRETARY WEBB: Four to zero. 

CHAIRMAN LOCKYER: Warden, good luck. I'm 

consistently impressed, frankly, by the professionalism 
exhibited by yourself and the other wardens that we have seen 
this year. It's a tough job, and it feels like it's in good 
hands, as much as one can tell from — 

MR. PICKETT: It's in good hands, thank you. I 
appreciate that. 

CHAIRMAN LOCKYER: Our third is Mr. Larry Witek. 

Good afternoon, sir. 

MR. WITEK: Good afternoon. 



19 
20 

21 
22 
23 
24 
25 
26 
27 
28 



20 

CHAIRMAN LOCKYER: Well, you've already had these 
nice comments made by Senator Ayala. You may want to quit while 
you ' re ahead and ask for the vote . 

[Laughter. ] 

CHAIRMAN LOCKYER: Did you want to begin? 

MR. WITEK: Sure. 

CHAIRMAN LOCKYER: Go ahead, sir. 

MR. WITEK: My name is Larry Witek, and I'm currently 
the Warden at the California Institution for Men at Chino. 

I began my career with the California Department of 
Corrections in 1970 at the California Institution for Men as a 
correctional officer. I spent approximately 12 years at the 
California Institution for Men, and during those years, I've 
promoted from officer to sergeant, to lieutenant, and I was also 
in the counseling series as Correctional Counselor I, Counselor 
II, and a Counselor III. 

In 1982, I promoted to the California Rehabilitation 
Center as a Correctional Counselor III. During that time at the 
California Rehabilitation Center, I was also the employee 
relations officer, and I was also an acting program 
administrator . 

In 1984, I transferred to the California Correctional 
Institution at Tehachapi, and I was a part of the activation 
team for the Southern Maximum Security Complex and opened up the 
new Maximum Security at Tehachapi that opened in 1986. I was a 
correctional captain. I was responsible for the security and 
the custody of the institution, and responsible for budget 
packages in establishing that prison. 



21 

In 1986, I transferred to the Richard J. Donovan 
Correctional Facility activation team in San Diego. I was a 
part of the activation of that new prison as a correctional 
captain. In 1987, when we activated the prison, I was promoted 
to Associate Warden. I was also a part of the activation — 
excuse me, also responsible for negotiating with the California 
Correctional Peace Officers Association, representing management 
in the activation of that prison and also the prison at 
Tehachapi . 

In 1991, I promoted to the California Institution for 
Men as Chief Deputy Warden. That was at the time Mr. Mike 
Pickett was the Warden and promoted there, and I was his Chief 
Deputy Warden. 

I feel that we were instrumental in making some 
changes at the prison, and I really appreciate Senator Ayala ' s 
comments, because I really feel we worked hard, not only with 
the staff in the institution, and the management staff, but also 
with the local community, and the Senator's office and the 
Assembly's office. 

Since that time, I worked with Mr. Pickett from 
'91-93, and then Mr. Pickett promoted to the California Medical 
Facility — excuse me, transferred there as a Warden. At that 
time, August 30th of 1993, I became the acting Warden, and in 
November was appointed as the Warden at CIM. 

Thank you. 

CHAIRMAN LOCKYER: Are there questions? Senator 
Ayala. 

SENATOR AYALA: Yes, I've been waiting for this a 



22 



long time . 



[Laughter. ] 
SENATOR AYALA: I can't believe that in front of us, 



to be named a warden at Chino, I remember Larry when he was 
playing football in high school and before that. And I knew his 
parents very well. I went to school with his mother. And his 
father, who is in the audience with his mother and his wife and 
daughter, Larry Witek, Senior, is a veteran of Marine Corps 
action in the South Pacific, Senator Craven. Maybe you served 
at the same time, either at Tarawa or one of those terrible 
places out there. I didn't know Larry Senior until he came out 
of the Marines . 

But I want to ask him, may I ask Larry Senior a 
question? 

CHAIRMAN LOCKYER: Sure. 

SENATOR AYALA: I have a petition here with I don't 
know how many names support Larry Witek, Junior, for Warden. 

I just want to ask Larry Senior: how long did it 
take you to get these signatures? 

[Laughter. ] 

CHAIRMAN LOCKYER: Actually, they're all the same. 
It only took an hour or two. 

[Laughter. ] 

SENATOR AYALA: I know that his folks, and his wife, 
his daughter, are just as proud as I am to have Larry Witek be 
named the Warden at CIM. 

I toured that facility before they brought any 
prisoners in. I was a senior in high school. Never dreamed a 
local boy would someday become the Warden on that institution. 



23 

So Larry, I'm real proud of you, and I have no 
comments other than to say that we've worked very well with 
Larry and his staff, and we look to continue doing that. 

CHAIRMAN LOCKYER: Well, you've got one vote so far. 

[Laughter. ] 

CHAIRMAN LOCKYER: You might want to, perhaps, 
introduce your family. Do you mind? 

MR. WITEK: No, that would be very nice. 

This is my wife, Deborah, and my daughter, Kris ten. 
And my father Larry, and my mother Jeanice. 

CHAIRMAN LOCKYER: Nice to have you all. 

Are there other questions at all? 

This isn't one of the major issues of the day, but 
since it's kind of an opportunity to learn, and it was in my 
mind, did you have any additional thoughts or observations on 
weights in the prisons, or t.v.s, since those seem to be 
currently topical in our environment? 

MR. WITEK: Well, I think, you know, Mike Pickett, 
you know, we worked well together, and we have a lot of the same 
philosophies, and we really grew up in this business, and I grew 
up in this business as a kid, living on prison grounds. So, 
I've seen a lot of this. 

You know, I think the weights, like Mike said, 
there's some pros and cons to it. Naturally, the public, 
they're intolerant of seeing — being victimized and intolerant 
of crime, and I fully understand that. 

When you see inmates in pictures, and they look 
healthy, and they look physically massive, that's not very 



24 

attractive to the public. 

When people get victimized, I think it's like Mr. 
Pickett said. I don't think they're really being victimized in 
the sense of the muscle and the power; it's the guns, and it's 
just a blatant disrespect for people. 

So, the weights in the community — or excuse me, in 
the prison, I think we do use them as management tools. If we 
use them properly, if we have — use them as a privilege. If we 
make sure that inmates have to program, they have to do some 
things before they get to weight piles, if they don't just sit 
on weight piles during the day when they refuse to behave 
properly, they refuse to program and do the things that we ask 
them to do to better themselves, I don't think they deserve 
weights then. And that's the time that we take it away. 

And that ' s the way most wardens and managers handle 
it. 

CHAIRMAN LOCKYER: So, it helps in your discipline. 

MR. WITEK: Sure. It gives us a tool. 

CHAIRMAN LOCKYER: What other perks, or what other 
tools do you have like that that you can either take or remove? 
I mean, obviously good time — 

MR. WITEK: Well, good time is, if an inmate doesn't 
program and have some — then he doesn't earn good time, so 
that's definitely the biggest benefit for an inmate. 

CHAIRMAN LOCKYER: What else is there like that? Are 
there other things that — 

MR. WITEK: We have privileges such as canteen 
privileges. If inmates get disciplined, we take that away. If 



25 

that discipline's related to — 

CHAIRMAN LOCKYER: And that's — 

MR. WITEK: That's to go and purchase things. They 
can purchase some different items. 

CHAIRMAN LOCKYER: Candy, and cigarettes, and stuff 
like that? 

MR. WITEK: Right. 

CHAIRMAN LOCKYER: So, they might have that withheld. 

MR. WITEK: You bet. 

CHAIRMAN LOCKYER: That's kind of the list, sort of, 
other than the negative side of things, the punishment side? 

MR. WITEK: Yeah, if it's — yeah, phone calls. If 
it's related to visiting, we can take away visiting privileges, 
those types of things . 

CHAIRMAN LOCKYER: Other questions? Yes, Senator 
Ayala. 

SENATOR AYALA: Warden Witek, you may recall, we had 
a real problem with an escapee from Chino that went out into the 
hills and created a problem by murdering four or five people. I 
don't recall how many. 

At that time, the rationale given to us for not 
knowing that this individual was a dangerous individual is that 
he arrived from Los Angeles County Jail and his jacket didn't 
arrive with him. They didn't know what kind of a person he was, 
and so he was put out in the minimum security, and he took off. 

Has that been corrected, the fact that the inmate and 
the jacket arrive together so they know who they have in front 
of them before they turn him loose? 



26 

MR. WITEK: Inmates now don't go directly to minimum 
custody until we fully screen them, and we have all the wants 
and warrants checked and cleared. 

Normally, most inmates are transferred to other 
institutions out of the Reception Centers . The ones that we do 
move into the minimum custody now, we still put them into a more 
controlled setting until we're — they're fully cleared. 

At that time, I believe, they were processing inmates 
somewhere in a timeframe of 11-15 days, and they were moving 
them rather rapidly. And today, we're taking 30-45 days, and we 
make sure that we get clear wants and warrants on an inmate 
before we move them out. So, that would prohibit an inmate from 
another state, that happening. 

SENATOR AYALA: Thank you. 

CHAIRMAN LOCKYER: What would you say is the hardest 
part of your job? 

MR. WITEK: The hardest part of my job is the — I 
think it's the managing of the employees, the training, the 
developing, the overcrowding, the budget reductions. There's a 
number. All of those things collectively, but the overcrowding 
and the budget reductions are probably right at the top. 

CHAIRMAN LOCKYER: You sort of have a chance, here's 
four Senators, and probably there have been occasions that, "I'd 
like to tell those folks something." 

What is the "something" that you had, on occasion, 
wished to let us know about? 

We'll vote first, if you want. 

[Laughter. ] 



27 

MR. WITEK: Mark your votes down so you don't change 

them. 

[Laughter. ] 

CHAIRMAN LOCKYER: But, you know, I think we all 
learn from this exchange of information. 

MR. WITEK: Well, I think the Department of 
Corrections is changing ever so rapidly. When I started, there 
was somewhere in the vicinity of 20,000 inmates, and we're up to 
120,000. We're looking at "3 Strikes, You're Out", you're 
looking at over 200,000 in the next five years. 

I think, you know, the Director of Corrections, I 
think, does an excellent job. I think where we're headed today, 
we've done a lot of things, and that's not a plug. I'm telling 
you that truthfully, how I see the Department of Corrections. 
We've made a lot of changes today, and a lot of things are 
happening, a lot of good things. 

We ' re taking people in the Department that don ' t have 
near the experience that we used to have in our Department . 
When I started, there were many veterans, people with 20-plus 
years, that helped me learn, helped Mike Pickett learn. Those 
people are slowly disseminating and we don't have them anymore. 

What we have to do now is, we have to train staff, 
really accelerate them and bring them on faster. And get them 
more up to speed in what's going on. We have to treat people 
better. We've got a lot of things happening, sexual 
harassment, different things that are going on in all arenas. 

In the Department of Corrections, we've taken some 
real strong stands, and I think we've done some very good things 
in those areas. And I think that just the sensitivity of 



28 

knowing that, and the arena, how difficult it is to manage. 

CHAIRMAN LOCKYER: So, the quality of the 
environment, and the program, is different than when you were 
first starting out? 

MR. WITEK: Much more sophisticated and, I think, the 
staff are better trained. A lot of good things are happening. 

CHAIRMAN LOCKYER: What's the pleasure — did anyone 
wish to comment? Yes. 

MR. RALPH: Mr. Chairman, Members, ABCW supports this 
nomination. 

Thank you. 

CHAIRMAN LOCKYER: Thank you. 

MR. SEARCY: Mr. Chairman, Committee, I am Frank R. 
Searcy, President of the Chicano Correctional Workers 
Association. 

With great pleasure, I am here today to offer this 
Association's endorsement of Mr. Witek for Warden. 

I had about a three-hour presentation all ready; 
however, Mr. Witek said it all in a few words, so I really don't 
have to say anything. 

However, even though Mr. Ayala also made some good 
comments, one thing that has not been said, and I think this 
Association at this time wants to offer this, that Mr. Witek is 
a very, very effective administrator. That goes without 
question. 

SENATOR AYALA: I thought I said that. 

[Laughter. ] 

MR. SEARCY: Just to back that up, a few weeks ago, 



29 

when this issue came up to our Board of Directors of were we 
going to support Mr. Witek, the discussion was very minimal, and 
the vote for yes was overwhelming immediately. 

So, gentlemen, ladies and gentlemen, again, I'd like 
to offer this Association's endorsement for Mr. Witek as Warden 
at the California Institution for Men at Chino . 

Thank you. 

CHAIRMAN LOCKYER: Thank you very much. 

MR. VICARIO: Ladies and gentlemen, my name is John 
Vicario. I'm the Chino Chapter President of CCWA, who initiated 
the endorsement of Mr. Witek 's confirmation. 

I've been sent by a contingency or a contingent of 
officers, not CCWA members, who felt that someone should go or 
should come here and voice their support for Mr. Witek. 

CHAIRMAN LOCKYER: Is that your petition? 

MR. VICARIO: No, and I'm glad now that we didn't do 
that after all. 

[Laughter. ] 

MR. VICARIO: Things got kind of hectic, so we didn't 
get into that. But if we would have had a couple more days, we 
would have presented another one . 

Again, I'd like to voice our support for Mr. Witek 's 
confirmation. 

Thank you. 

CHAIRMAN LOCKYER: Thank you very much. 

Senator Ayala moves confirmation, I think. 

SENATOR AYALA: I take honor in doing that, 
supporting the nomination of Mr. Witek as the Warden at the 



30 

California Institution for Men at Chino. I'm real proud of that 
motion. 

CHAIRMAN LOCKYER: Well, it's one aye and three noes. 

[Laughter. ] 
CHAIRMAN LOCKYER: Call the roll, please. 
SECRETARY WEBB: Senator Ayala. 
SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 
Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Lockyer. 
CHAIRMAN LOCKYER: Aye. 
SECRETARY WEBB: Four to zero. 
CHAIRMAN LOCKYER: Good luck. 
MR. WITEK: Thanks to all of you very much. 
[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
2:45 P.M. ] 

— 00O00 — 



31 



CERTIFICATE OF SHORTHAND REPORTER 



I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing transcript of the Senate Rules Committee hearing 
was reported verbatim in shorthand by me, Evelyn Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

^ IN WITNESS WHEREOF, I have hereunto set my hand 
this (J day of June, 1994. 





rELYN "J . 
Shorthand 



porter 



254-R 

Additional copies of this publication may be purchased for $4.50 per copy 
plus 7.75% California sales tax. 

Senate Publications 
1020 N Street, Room B-53 
Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 254-R when ordering. 



LSoo 












HEARING 



SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 







DOCUMENTS DEPT. 

JUL 8 1994 



SAN FRANCWCO 
PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

MONDAY, JUNE 13, 1994 
1:47 P.M. 






255-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 113 
SACRAMENTO, CALIFORNIA 



MONDAY, JUNE 13, 1994 
1:47 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM LOCKYER, Chair 

SENATOR RUBEN AYALA 

SENATOR ROBERT BEVERLY 

SENATOR NICHOLAS PETRIS 

MEMBERS ABSENT 

SENATOR WILLIAM CRAVEN, Vice Chair 

STAFF PRESENT 

CLIFF BERG, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

GARY MENDOZA, Commissioner 
Department of Corporations 

STEVEN THOMPSON 

California Medical Association 



Ill 

INDEX 

Page 

Proceedings 1 

Governor ' s Appointees ; 

GARY S. MENDOZA, Commissioner 

Department of Corporations 1 

Background and Experience 1 

Questions by CHAIRMAN LOCKYER re: 

Particularly Difficult Issues 2 

Questions by SENATOR PETRIS re: 

Blue Cross's $1 Billion Foundation 3 

Initiation of Blue Cross Contributions 4 

Imposition of Conditions when Nonprofits 

Decide to go Private 5 

Commitments Made by Blue Cross 6 

Types of Contributions by Blue Cross 7 

Contributions to Poison Centers 8 

Questions by CHAIRMAN LOCKYER re: 

Dollar Figure of Blue Cross Assets to be 

Contributed 8 

Types of Contributions 9 

Confidence in Blue Cross Meeting its 

Commitment 9 

Approval of the Blue Cross Restructuring 10 

Restructuring not a Conversion 10 

Questions by SENATOR AYALA re: 

Regulation of Financial Planners 11 

Killea Bill to Give Additional 

Jurisdiction to Department regarding 

Financial Planners 11 



IV 

INDEX (Continued) 

Department's Position on Killea Bill 11 

Questions by CHAIRMAN LOCKYER re: 

Department's Supervision of Administrative 

and Profit Taking in HMOs Dealing with 

Worker Comp. 12 

CMA ' s Report of Differences among Plans 13 

WellPoint 's Costs Reported in CMA Study 13 

Witness in Support: 

STEVEN THOMPSON 

California Medical Association 14 

Motion to Confirm 15 

Committee Action 15 

Termination of Proceedings 15 

Certificate of Reporter 16 



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P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN LOCKYER: Well, I guess we ought to go to 
4 Mr. Mendoza. 

Good afternoon. 

MR. MENDOZA: Good afternoon, Mr. Chairman. 

CHAIRMAN LOCKYER: Did you want to start with any- 
opening statement at all? 

MR. MENDOZA: Sure. 

My name is Gary Mendoza. In July, 1993, the Governor 
appointed me Commissioner of Corporations. 

I believe that by virtue of my educational 
background, my experience, and my temperament, that I can be and 
have been an effective Commissioner of the Department of 
Corporations . 

At the time Governor Wilson appointed me Commissioner 
of Corporations, I was a practicing corporate lawyer with the 
firm of Reardon and MacKenzie, and during my private practice, 
got a lot of experience in corporate securities laws, which is 
one of the more significant aspects of the Department's 
jurisdiction. 

Before I attended Yale Law School, I was a certified 
public accountant. And in order to be an effective certified 
public accountant, an effective corporate lawyer, you need to 
understand the problems that your business clients are facing, 
and you need to understand their business. And I think to be an 
effective Corporations Commissioner, it's important to 
understand the businesses that you're responsible for 



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regulating. And I think my experience as an accountant and as a 
corporate lawyer have prepared me well for that aspect of my 
position. 

I think also to be an effective accountant and an 
effective lawyer, you need to be a good listener, and I don't 
believe that I have a monopoly on good ideas. And I've made it 
a practice during my last ten months as Commissioner to reach 
out to a broad cross-section of those people who live under our 
regulatory regime or who are affected by our regulatory rules, 
to get the broadest input as possible. 

And also, I think that I have a keen appreciation of 
the state's interest in balancing the need for consumer and 
investor protection against the state ' s need to reinvigorate the 
California economy, and we've been pursuing a number of things 
during my ten-month tenure to date along those lines. 

CHAIRMAN LOCKYER: Any particular issues that's been 
the most difficult during your tenure? 

MR. MENDOZA: I think we've been very active in the 
health care area. We have a series of initiatives under way to 
try and work to continue to improve the quality of health care 
provided by California's health care service plans. 

I think we've taken a number of actions in the 
securities area, both legislatively — we have a bill that's 
currently was passed out of the Senate last week to provide for 
new exemption from qualification which we believe will make it 
easier for small businesses to access the capital markets. 

We've also had to bring a number of enforcement 
actions for people who have fallen out of line and have violated 



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securities laws. We're trying to do that in a way to draw 
attention to the consuming -- to the investing public with 
respect to the investment frauds out there. And we've been, I 
think, successful in getting our message out to the investment 
public that, you know, we can do a lot to protect them, but we 
can't do as much as they can to protect themselves. 

We've been active with the lenders industry, to try 
and put together a bill to consolidate the three lenders laws 
that Assemblyman Caldera is carrying that was made a committee 
bill when it was heard in his committee. It would streamline, 
we believe, the regulatory burdens put on the industry without 
compromising the protections afforded the consuming public. 

There's just been a broad — you know, it's been a 
very active ten months in the Department, but fortunately, I 
think I've got very strong people to work with, and I've also 
been able, as I said, to reach out to a number of people in the 
private sector to get the benefit of their input. 

CHAIRMAN LOCKYER: Senator Petris, are you jumping 
9 in? 

SENATOR PETRIS: At the proper time. 

CHAIRMAN LOCKYER: Now is proper. 

SENATOR PETRIS: I wanted to ask about the Blue Cross 
$1 billion foundation. 

You mentioned at the outset that you feel you have 



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the temperament to be Commissioner of Corporations. What is the 



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nature of the temperament that enables you to get such a 
tremendous concession out of this huge corporation, other than 
the fact that they're under your jurisdiction? 



MR. MENDOZA: Well, I think almost from the moment I 
arrived at the Department, we've been working with Blue Cross to 
get them to put forward a plan to use all of their assets for 
the benefit of the public. And we had a series of meetings over 
the last 8-10 months with that in mind. 

I think we've steadily kept the focus on that. I 
think we've made it clear to Blue Cross what we think is 
appropriate. 

Two weeks ago, they put forward the first step along 
the path we'd like them to go down, in which they committed to 
contribute $100 million to charities this year, and to put 
forward a plan within the next several months to use all of 
their assets to the benefit of the public. 

So, I think we've been, you know, focused on this 
issue, and we've worked with them, and I think we've -- they 
understand what are expectations are. I believe they will put 
forward a plan that meets those expectations, although we still 
have to see the plan, and we want to work with them in the 
development of it. 

SENATOR PETRIS: Are you the one that initiated that 
after the Isenberg legislation started to move? 

MR. MENDOZA: The Department at the time of their 
restructuring application did raise a question with respect to 
what the restructuring would do to Blue Cross's ability to meet 
its charitable responsibilities. 

In April, 1993, before I arrived at the Department, 
we sent a letter to Blue Cross, asking them for their 
comprehensive public benefit plan. When I arrived at the 



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Department, we had not yet received that plan. I sent a series 
of letters to Blue Cross, asking them for that plan. 

The plans that they ultimately submitted were 
inadequate, and we told them that they were inadequate, and now 
I think they understand what we are looking for in their 
comprehensive plan. I expect that they will put forward a 
comprehensive plan that will — that we're going to take under 
submission and very carefully scrutinize, but I think we have a 



clear understanding, at least in our internal minds, with 



respect to what we are looking for, and I think we communicated 
that to Blue Cross. 

SENATOR PETRIS: Well, the reason I asked, I was very 
impressed when I read about this in the newspaper. They're 
required to spend $100 million in 1994, and I guess there'll be 
some more in the future, I don't know. 

It's not uncommon, is it, when a nonprofit 
corporation of considerable impact decides to go private, that 
the Department can impose whatever conditions it wants that are 
reasonable, that is, before granting approval. 

MR. MENDOZA: Right. 

SENATOR PETRIS: And I suppose that's done from time 
to time, but I don't remember any case that got this kind of 
publicity, based on the magnitude that we're talking about here. 

MR. MENDOZA: I think in Blue Cross's case, they had 
substantial amount of assets to be put to public purposes, and I 
want to make certain that they do use those assets for the 
benefit of the public. And we've made that clear to Blue Cross, 
and they've made a submission two weeks ago that recognizes our 



interest in that. 

I think the reason you've not seen a matter of this 
size, frankly, I don't think there has been one of this 
magnitude. 

5 But I think that Blue Cross understands what we would 

like to see in a comprehensive benefit plan. They have 
committed to presenting a plan to us within the next several 
months on how they're going to use all of their assets for the 
benefit of the public. 

And the $100 million commitment that they made two 
weeks ago is an important interim step. 

SENATOR PETRIS: When I was carrying a single-pay 
health plan two or three years in a row, the response from the 
industry was that it was too costly for them, and they're barely 
hanging on, and they're not making much money, which we found to 
be untrue generally across the board. 

I remember that Blue Cross, the prior year, had made 
$900 million just in one year in profit. It doesn't show like a 
private corporation would because it's a nonprofit and comes 
under a different category, but those are the numbers that were 
21 published in the press. 

I made a kind of a mental note at the time that this 
is a pretty big operation, and if we could turn it a little more 
in the direction of a public benefit, it would be very helpful. 
That's why I applauded the steps that you're taking. 

Now, from that $1 billion foundation, is there some 
annual amount that they're now going to be required to expend, 
or are you waiting for a plan to be approved? 



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MR. MENDOZA: What they've committed to do at this 
point is to contribute $100 million to charities in 1994, and 
then present to the Department a comprehensive plan to use all 

4 of their assets for the benefit of the public. And currently -- 

5 SENATOR PETRIS: Excuse me. 

6 Are these contributions in the health field? 

MR. MENDOZA: Yes, they are. 
SENATOR PETRIS: It would be to nonprofit hospitals 



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MR. MENDOZA: They designated $25 million of it 
already: $10 million is going to go to the Poison Centers, the 
State Poison Center; they're going to make contributions to the 
children's hospitals; they're going to make contributions to a 
number of clearly charitable pediatric charitable health care 



15 activities. 



So, I think the money that they've designated is 
clearly public benefit use of those assets. And they have 
committed to designate an additional $75 million in the next 
several months, and we're going to closely look at the 
designated beneficiaries of that money to make certain that 
we're satisfied that it is an appropriate — the beneficiaries 
are appropriate public benefit beneficiaries. 

And with respect to the comprehensive plan that they 
have committed to submit, Blue Cross holds stock that is -- has 
a market value of about $2.6 billion. That's the WellPoint 
stock. And they've committed to present the plan, a 
comprehensive plan to use all of their assets for the benefit of 
the public. 



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The $1 billion number that you've seen reported is a 
suggestion that I had previously made to the Board of Blue Cross 
with respect to the establishment of a foundation in a letter 
that I sent to Blue Cross, which someone leaked to the press. 
It wasn't anybody at the Department — we certainly didn't want 
to do that -- but someone did leak it to the press. So that the 
$1 billion that the press has reported with respect to the 
foundation is one suggestion I made as to what I think might be 
an appropriate component of their comprehensive public benefit 
plan. 

SENATOR PETRIS: Well, I've lost my train of thought. 
Oh, yes, it was on the Poison Centers. 

Last week there was something in the press that 
they're closing down all over the country in large numbers, not 
that we have that many. And we've been fighting very hard to 
keep those open here in California. 

So did the Department direct them, direct their 
attention to help the Poison Centers here? 

MR. MENDOZA: Well, early, during the — earlier this 
year, when they began to designate who they might think would be 
appropriate beneficiaries of their contributions, at that time 
they were talking about contributions on the level of $25-35 
million this year, and the Poison Centers was among the list of 
beneficiaries. So, that was Blue Cross's idea. 

SENATOR PETRIS: Thanks. 

CHAIRMAN LOCKYER: When you say all of their assets, 
does that mean it'll be higher than a billion? 

MR. MENDOZA: They're committed to presenting to use 



3 



all of their assets to the benefit of the public. That doesn't 
mean they're going to contribute all of their assets to a 
charitable foundation, but they're going to develop a plan to 
use all of their assets for the benefit of the public. 

CHAIRMAN LOCKYER: What would that mean? 

MR. MENDOZA: They could do a number of things. They 
could contribute all to a foundation. I'm not sure that's what 
they'll do. They could say, we're going to expand our nonprofit 



8 



operating activities, and we're going to use that stock to help 



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finance that activity. 



11 CHAIRMAN LOCKYER: What would that be like? 



MR. MENDOZA: I'm sometimes speculating. 



13 CHAIRMAN LOCKYER: Sure. 

MR. MENDOZA: They could say, we're going to buy a 

15 



number of free-standing clinical hospitals in low-income 
neighborhoods, and we're going to staff them up, and we're going 
to provide health care to medically underserved populations. 

I think that the types of things that they could do 
is a pretty broad spectrum of things, because I think there's a 
lot of unmet needs in the health care area in the State of 
California. 

CHAIRMAN LOCKYER: Do you feel confident that 

23 commitment will be met? 

24 MR. MENDOZA: They made a commitment to the 
Department in the undertaking to present a comprehensive plan to 
use all of their assets, and they certainly understand that 
that ' s what the Department ' s expectation is . 

CHAIRMAN LOCKYER: Do you still have some leverage 



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with them? Are they awaiting some approval? 

MR. MENDOZA: Well, I think we have ongoing 
responsibility to monitor their public benefit activities. 

In the case of nonprofit companies that are licensed 
as Knox-Keene Act plans, we stand in the shoes of the Attorney 
General. So, our jurisdiction in this regard is ongoing. 

CHAIRMAN LOCKYER: But you approved their 
reorganization . 

MR. MENDOZA: We approved their restructuring, and we 
concluded at that time that it was not a conversion, and we 
continue to believe that it was not a conversion, but the 
restructuring did not end their nonprofit public benefit 
responsibilities. They still have the obligation to act in the 
public interest with respect to the use of their assets. And I 
think working with them, we're going to come up with a 
comprehensive plan to address that. 

CHAIRMAN LOCKYER: Why is it not a conversion? 

MR. MENDOZA: Because they retained nonprofit control 
of those assets. 

The assets were held originally by Blue Cross, and 
they shuffled them around, and they ended up being held by a 
for-profit company that Blue Cross now owns 80 percent of. They 
used to own 100 percent of those assets, then they sold 20 
percent to the public, and they ended up owning 80 percent of 
those assets plus $500 million, which is what the company got. 

So, they didn't take the ownership of the assets 
outside of the nonprofit charitable umbrella as a part of the 
restructuring, so that's why it wasn't a conversion. 



11 

CHAIRMAN LOCKYER: Senator Ayala. 

SENATOR AYALA: Mr. Mendoza, your Department gets 
involved with the regulations involving the financial planners. 
4 Do you think that these folks are trained well 

enough? Do you think that the laws require them to protect, 
really, the public from abuse from these financial planners? Do 
you think the laws and regulations are sufficient to protect the 
consumer? 



9 MR. MENDOZA: Well, currently our activity with 

respect to financial planners is associated with our regulation 

11 of investment advisors and brokered dealers. 

12 Senator Killea has a bill that she is working on to 
give us additional jurisdiction with respect to financial 
planners . 



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15 SENATOR AYALA: Where is that bill now? 

16 MR. MENDOZA: I think it's still in her committee; I 
think it's still in her committee. 

I think that generally, the oversight of that 

19 



activity has worked well with respect to brokered dealers and 
investment advisors, although there have been some significant 
problems. One of the more significant problems that we had to 
face during the early part of my tenure was the Prudential 
23 limited partnership. 

SENATOR AYALA: That bill requires the so-called 
planners to disclose to the clients a minimum amount of 
background, knowledge, and so forth. 

Do you support that? 

MR. MENDOZA: I believe that disclosure is an 



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important part of consumer protection, so we certainly would 
support that. 

SENATOR AYALA: That bill would do that; wouldn't it? 

MR. MENDOZA: I think that's right. 

I think we want to make certain that we -- that the 
financial planner bill works in concert with our brokered dealer 
and investment advisor activities, and that if we're given 
responsibility for regulating financial planners, that we have a 
substantive law that makes sense and the enforcement tools 
necessary to enforce that law if financial planners who are 
licensed by the Department of Corporations -- 

SENATOR AYALA: Currently, there's nothing out there 
for you to -- 

MR. MENDOZA: Currently no. Currently, financial 
planners are not regulated, to the extent they are, 
quote-unquote, "financial planners". Many of them are 
investment advisors, and they're regulated under our investment 
advisor act, and many of them may be brokered dealers and they 
would be regulated as brokered dealers. But financial planners 
themselves are not a regulated industry in the Department ' s 
jurisdiction. 

CHAIRMAN LOCKYER: Part of your responsibility is to 
supervise administrative and profit taking in HMOs that deal 
with worker comp. I guess you have the 15 percent regulation 
that would only allow overhead of 15 percent that is in profit 
or administrative. 

Now, the Medical Association has done a report, and I 
guess numerous others, pointing out the difference among 



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providers. As I recall, something like 40 percent of them 
exceed 15 percent, the largest being the one that we've been 
talking about, or at least I think the largest; that is, 30 
percent overhead and profit, compared to Kaiser, which is under 
5 percent. You have 600 percent differences among plans. 

What are your thoughts about what you might do about 
that? 

MR. MENDOZA: Currently, we don't regulate for 



9 profits of HMOs. Our 15 percent cap applies for administrative 



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and overhead costs, principally marketing and SIGNA. 

I think it's important that the Knox-Keene licensees 
meet their responsibilities to the enrollees that they serve, 
f3 and we do take a look at there administrative costs. For the 

most part, those plans that have administrative costs in excess 
of 15 percent are smaller plans that have less of an early basis 
to spread their costs around, or plans with fairly aggressive 
marketing plans and expansion of business plans. 

So, we take a look at that, but we don't prohibit -- 
we don't say that if you have administrative costs in excess of 
15 percent, that it is a violation of our regulations, but we 
certainly look for a legitimate business explanation as to why 
those overhead costs do exceed 15 percent. And for the most, 
the instances that we've looked at, it's a result of newer 
plans, smaller plans, or plans with aggressive expansion plans. 

CHAIRMAN LOCKYER: Which is it in the case of 
WellPoint? Newer? 

MR. MENDOZA: I think that — 

CHAIRMAN LOCKYER: It's certainly not small. 



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MR. MENDOZA: No, no. 

Well, WellPoint is -- WellPoint' s not one of our 
licensees. WellPoint 's a holding company. So, I don't know -- 
WellPoint doesn't report those numbers to us. 

CHAIRMAN LOCKYER: They're at 30 percent plus in the 
CMA study. 

MR. MENDOZA: I think a big part of that includes 
profits . 

CHAIRMAN LOCKYER: Yes, that could be. 

MR. MENDOZA: And I think they do have a fairly -- 
they have been fairly profitable in the last year. They're 



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tr, 
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12 fairly profitable. So, I think the big difference between the 



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15 percent and the number that CMA reported is probably profits. 

CHAIRMAN LOCKYER: Is there anyone present that 
wanted to make any public comment? Mr. Thompson. 

MR. THOMPSON: Mr. Pro Tern, Senators, my name is 
Steve Thompson. I represent the California Medical Association. 

We are here to support the confirmation of 
Mr. Mendoza. We have found, while not always in agreement with 
Mr. Mendoza and the decisions of the Department of Corporations, 
in the last ten months there's been an open door. There's been 
reflection, analysis, and intelligence that we figure did not 
sit in that office previously. 

Mr. Mendoza represents, coming from the private 
sector, I think, the best of public service that we all hope for 
when we find appointees. And while there will continue to be 
some disagreements with this department, we feel that we have, 
in a sense, a very fair and open administrator. 



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15 

Thank you . 

CHAIRMAN LOCKYER: What's the pleasure of the 
Committee? 

SENATOR AY ALA: Move. 

CHAIRMAN LOCKYER: Motion by Senator Ayala. Call the 
roll, please. 

SECRETARY WEBB: Senator Ayala. 
SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 
Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 
SECRETARY WEBB: Three to zero. 
CHAIRMAN LOCKYER: Thank you, good luck. 
MR. MENDOZA: Thank you. 

[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
2:47 P.M. ] 

--00O00-- 



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16 
CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing transcript of the Senate Rules Committee hearing 
was reported verbatim in shorthand by me, Evelyn Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN WITNESS WHEREOF, I have hereunto set my hand 



13 this / / day of June, 1994. 



TN J. A MI2 



-EVELYN J. ' MIZAK 
Shorthand Reporter 





255-R 

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